Global manufacturing company Umicore has paused construction of a battery plant in Ontario as the company rethinks its plans, part of a broader response to slowing demand for electric vehicles.
“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 Umicore spokesperson told Electric Autonomy.
Brussels-based Umicore had only broken ground for the facility in Loyalist Township near Kingston, Ontario last year. It was expected to support 600 new jobs and provide battery materials for as many as 800,000 electric vehicles annually after starting operations in 2026. The project had received conditional funding from the federal government for up to C$551 million, along with up to $424 million from the provincial government, CBC writes.
Premier Doug Ford has stated that the province’s funding investment in the plant is contingent on spending and job creation, among other factors, and clarified that Ontario hasn’t “given them a penny yet.”
Loyalist Township Mayor Jim Hegadorn, who says the town has been discussing the pause with Umicore, told Quinte News he thinks the project will still go ahead but may include some new changes.
The company said it was pausing to re-evaluate its battery materials business after the EV industry showed slower than anticipated growth in recent months. Other battery companies are also reconsidering their growth as sales drop and auto manufacturers scale back plans to produce EVs.
Though global EV sales continue to grow, they are doing so now at a slower rate than in the past few years. In Canada, S&P Global reported that their market share was 0.7% less in the first quarter of 2024 compared to the last quarter of 2023. Globally, BloombergNEF’s Long-term EV Outlook released in June projected that electric car sales will grow at an average of 21% per year in the next four years, lower than the average of 61% reported between 2020 and 2023.
Ontario’s premier also shrugged off concerns that the plant closure signals any threats to the federal and provincial governments’ $2 billion worth of investments across several EV projects throughout Ontario. He said the governments are “confident that more and more EV sales will happen. It has increased worldwide and it’s going to continue to grow,” reports Queens Park Briefing.
Federal Finance Minister Chrystia Freeland similarly dismissed suggestions that the federal government’s plan to foster a battery and EV supply chain in Canada is starting to fall apart, says Bloomberg.
Umicore executives announced the company’s response to slowing EV sales in an early June conference call, where new CEO Bart Sap told attendees that “electromobility is not just a short-term trend”, but has “a confirmed trajectory that is reshaping the automotive industry.” Umicore, Sap maintained, “has its role to play” in the shift to electrification.
When asked if Umicore would exit the battery materials business, Sap said the company is still “fully committed.”
He explained that three main factors had driven Umicore’s decision to scale back its battery materials business: several of the company’s legacy contracts are ending faster than anticipated, and a ramp-up of new contracts in Europe was delayed, as has anticipated production for a battery manufacturing operation in China.
Umicore is therefore scaling back its growth to match new EV demand expectations and has “started a process of reassessing growth projections post 2024,” said Sap. The pause in construction at the Loyalist plant appears to be one outcome of the shift announced at that meeting.
Umicore’s reaction follows a string of similar shifts away from EVs by companies doing business in Canada. In a mid-July announcement, automaker Ford said it was abandoning plans for a $1.8-billion factory and EV battery park in Oakville, Ontario, using the facility instead to make gasoline-powered Super Duty pickup trucks.
Northvolt, a Swedish battery developer, has also hinted at reconsidering its investment in a Quebec facility as it undertook a strategic review, but has since said it will continue construction.
