Volkwagen has commenced construction on its $7-billion EV battery-cell plant project in St. Thomas, Ont., in spite of U.S. tariff challenges and declining EV sales.

A groundbreaking ceremony was held recently at the Southwestern Ontario development site. Once complete in 2027, the gigafactory will produce 90 gigawatts worth of batteries for North American EVs per year.

Volkswagen subsidiary PowerCo is developing the project. The German auto giant kept the development on track despite U.S. tariff increases on vehicle and autopart imports from Canada and declining EV sales that have caused other automakers and battery suppliers to pause projects or delay plans.

Magil Construction Canada received major contracts to lead the foundational work for three buildings at the site, including 500,000 square feet of formwork, 32,500 cubic metres of concrete and approximately 4,850 tonnes of rebar, according to an Ontario government news release. Meanwhile, Steelcon also received a major contract to install steel components at the site.

“The excitement in St. Thomas is palpable, as we celebrate this monumental construction milestone,” said St. Thomas Mayor Joe Preston. “The St. Thomas gigafactory is rapidly coming to life and already delivering on its promise of prosperity — supporting hundreds of local jobs and providing a significant boost to our economy right here in our community.”

The St. Thomas plant will supply battery cells to Volkswagen’s Scout Motors assembly plant in South Carolina and other North American manufacturing operations, according to Motor Illustrated.

Pictured: Future EV battery-cell plant in St. Thomas, Ont.

Rendering: Volkswagen Canada