Umicore Delays $2 Billion Ontario Plant as EV Demand Slows

(Bloomberg) — Umicore SA delayed plans for its C$2.8 billion ($2 billion) Ontario electric vehicle battery materials plant as consumer adoption falls short of expectations.

The manufacturer confirmed plans in October to build the cathode materials plant, but said in its half-year review on Friday that it would put off spending on construction pending further analysis of the maximum capacity of its current operations.

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It’s the latest blow to Canada’s nascent electric vehicle supply chain. Automakers including Ford Motor Co. and General Motors Co. also recently announced delays to manufacturing in Ontario for the sector, citing lower-than-expected demand. Northvolt AB is reviewing its timeline for a battery-cell factory near Montreal.

Umicore, which is based in Brussels and has a European EV battery materials joint venture with Volkswagen AG, said in June that it was starting to reassess its new projects around the world due to “the slowdown and ongoing reviews of the investments plans by EV manufacturers.”

The Ontario plant was expected to open by 2026 and provide battery materials for as much as 800,000 electric vehicles annually. The Canadian government planned to invest as much as C$551.3 million in the factory, while Ontario’s government planned to invest up to C$424.6 million.

Canadian Finance Minister Chrystia Freeland rejected a suggestion that her government’s battery and EV supply chain plan is starting to unravel.

“Absolutely not,” she said in a call with reporters from the Group of Twenty finance ministers’ meeting in Rio de Janeiro. “These kinds of major transformations are never a straight line. There are always bumps along the way, but I am absolutely convinced that for the jobs of today and the jobs of tomorrow, Canada does need to have an industrial plan and we do.”

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Electric vehicle adoption has increased but is still low, with only 11% of new vehicles registered in Canada last year being zero-emissions. The federal government has set targets for all new light-duty vehicles sold to be zero-emissions by 2035.

Although there have been recent setbacks in the electric vehicle transition, the Ontario government remains confident in the future.

“Global spending on EVs was up 31% in 2023, and as demand for EVs continues to ramp up in the years ahead, we are ensuring the supply will be made-in-Ontario,” Vic Fedeli, Ontario’s minister of economic development, said in a statement.

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