After three cornerstone suppliers and OEMs change or announce “strategic reviews” of their EV battery supply chain investments in Canada, industry and policymakers take stock

Editor’s note: This story was updated to reflect a statement from Minister Vic Fedeli sent after publication.

It’s been a series of wins for Canada over the last two years, sailing from one multibillion-dollar deal to the next and landing global EV battery supply chain heavyweights.

But recently the string of W’s are turning into much less certain U’s: unknowns.

In the last month, prized names in Canada’s EV battery supply chain — Ford, Northvolt and Umicore — announced they are reevaluating their strategy for participating in the EV transition and taking a more conservative approach to the factories they committed to building here.

“Definitely we’ve seen in the last year that OEMs are reviewing their commitment goals and the big plans they announced in 2021-2022 and scaling down,” says Alla Kolesnikova, head of data and analytics at Adamas Intelligence, in an interview with Electric Autonomy.

“I would not be surprised if there are more announcements from parties who earlier committed to do something here in Canada — and also in the U.S. and in Europe — that will scale down their plans.”

The abrupt change in tone about the near-term outlook for Canada’s EV battery supply chain is rattling stakeholders. It also throws into question the government’s strategy (including its pledged funding for the EV supply chain factories); specifically how and even if it will achieve the results initially touted.

“Long story short, Canada wants to be competitive in the global battery landscape,” says Matthew Fortier, CEO of Canadian industrial alliance organization Accelerate.

“Canada needs to figure out, ‘Okay, what’s our position in that?’ We have to develop a clear approach premised on collaboration between government and industry.”

Battery supply chain uncertainty

“We are not halting our plant but are delaying spending on its construction until we’ve reached the conclusions of the review of our Battery Materials business, as the EV market has worsened,” a spokesperson for Umicore wrote in an email to Electric Autonomy in response to questions about the company’s July announcement that it is delaying spending on its planned $2.7-billion Loyalist, Ont., battery materials plant.

“For Umicore, customers’ demand projections for our battery materials have steeply declined recently.”

The review Umicore is undertaking is for their global Battery Materials business group and was first announced in early June.

The Umicore statement follows a similar sentiment from Northvolt. Last month, the Swedish company sent mixed messages regarding the fate of its $7-billion battery cell plant outside of Montreal.

In late 2023, Northvolt’s CEO said the company may delay its international development plans in Germany and Canada. Then, in July, 2024, Northvolt announced a “strategic review” of its activities to be completed by the fall.

Shortly after, the company clarified its position.

“We maintain our commitment to Quebec and Canada and our intentions to build Northvolt Six here remain unchanged,” reads a statement on Northvolt’s website.

“Construction of the Saint-Basile-le-Grand and McMasterville technological campus continues during the strategic review of Northvolt’s activities.”

Around the time of the Northvolt announcement came an update from Ford.

The American OEM was scrapping its $1.8-billion factory retool and EV battery park plan in Oakville, Ont. Instead, it will invest an even larger amount to revamp the facility to make gasoline-powered Super Duty pickup trucks.

Ford says it “remains committed to developing a growing and profitable of its EV business.”

However, that will not be until later in the decade in Canada, it appears.

By contrast, Stellantis confirms in a statement to Electric Autonomy that “production of the all-electric Dodge Charger Daytona will start in summer 2024,” in Windsor, per the company’s earlier plans.

Finally, Tesla appears to have abandoned ambitions towards future factory development in Canada. This is per the Texas-based OEM’s updated lobbyist registry filing with the federal government.

The July 22 update is the first time since August 2021 that the filings do not state that Tesla is lobbying Canada to improve “permitting timelines, to increase the competitiveness of Canada and its ability to attract capital through approvals timeframes that are competitive with other manufacturing locations while working with government to identify incentives to further increase the attractiveness of Canada.”

The why

Adamas Intelligence’s Kolesnikova believes there are a range of reasons for industry retrenchment in North America. These include a skittish consumer market to geopolitical relations.

“There’s three parts of it,” says Kolesnikova.

“First is that consumers are not jumping onto electric vehicles because they want something that fits their lifestyle. Second is supply chain and how electric vehicles are manufactured and where the motors and batteries will be sourced from. The third one is this standoff between the Western world and China and its impact on the EV battery metals and materials supply chains.”

In addition, there are additive uncertainties on top of the state of the market. An American presidential election looms this year and the next Canadian federal election is on the horizon in 2025.

“A lot of money was committed on paper,” says Kolesnikova.

“If the political climate will not be accommodating, it would be reasonable for the companies to review [their plans].”

No manufacturer or OEM has identified either the U.S. or Canadian elections as the specific reason behind their “strategic review.” Umicore did not respond to specific questions from Electric Autonomy regarding the impact of the elections on its decision.

However, Umicore says it will provide a further update on its reviews (including its plans for Canada) in Q1 2025. That timing is after the U.S. election and, perhaps, the swearing in on January 20.

“There’s no linear trail here that doesn’t have peaks and valleys. You’re going to see some things happen that are discouraging. But that doesn’t change what the end destination is, which is an electrified and battery-powered world,” says Fortier.

“It just is where the world’s going.”

Canada’s long-term outlook

At the beginning of 2024, BloombergNEF said Canada was the number one country for lithium-ion battery supply chain potential. It was an achievement highly touted by politicians across all levels of government in Canada at the time.

Today, the outlook from some officials is still optimistic, but more guarded.

“Canada’s auto sector remains strong and uniquely positioned to design and produce the vehicles of the future, driven by a highly skilled workforce,” wrote Audrey Milette, spokesperson for the minister of Innovation, Science and Economic Development Canada, François-Philippe Champagne, in an email response to questions from Electric Autonomy.

“Global automotive and battery manufacturers are significantly investing in EV production in Canada, sometimes needing to adjust their timelines and plans to ensure long-term success.”

Vic Fedeli, Ontario’s minister of job creation who brokered many EV-related deals secured by the province in the last two years, is also taking a long view of the situation.

“The global shift to electric vehicles is a once-in-a-generation change across the automotive sector and while we understand that there will be challenges faced, we must continue to protect the thousands of auto workers across the province,” says Fedeli in an emailed statement to Electric Autonomy.

“Global spending on EVs was up 31 per cent 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. Ontario is a global auto manufacturing powerhouse and we will continue to create the conditions for businesses to succeed.”

For market observers the spate of delays and abandoned projects is not positive, per se. But it also doesn’t mean a complete failure.

“Not everything can be absolute success from the beginning. Not all the plans can be ambitious as originally planned,” says Kolesnikova.

“As long as we’re moving in the right direction and being agile to market circumstances, I think we’ll be in a good place. We are moving one way or another to great transitions…I would just say let’s wait and see what will happen.”