Volkswagen’s battery strategy is moving at two very different speeds. Just days after its PowerCo subsidiary confirmed that production at the planned $7-billion battery plant in St. Thomas, Ontario, will not begin until 2029, Volkswagen and longtime battery partner Gotion High-Tech unveiled a proposed €3.22-billion — roughly US$3.7-billion — expansion across Spain, Slovakia and Morocco.
The timing is striking, but the projects serve different markets and there is no disclosed evidence that money earmarked for Canada is being transferred overseas. Instead, the announcements show how quickly global battery plans are being reshaped around regional EV demand, technology choices and supply-chain economics. For Canada, the most important question is no longer whether Volkswagen still intends to build in Ontario, but how quickly the plant eventually scales once production begins.
A US$3.7-Billion Plan Spanning Three Countries
The newly disclosed plan would deepen Volkswagen’s battery footprint in Europe and North Africa through three joint ventures involving Gotion and Volkswagen’s battery company, PowerCo. According to Gotion’s September 28 disclosure, the projects are expected to involve about €3.22 billion in total investment. Gotion’s side would contribute roughly €1.598 billion, while PowerCo would contribute about €1.624 billion, with funding provided in stages rather than all at once. The package covers battery-cell production in Spain and Slovakia plus lithium-iron-phosphate cathode-material production in Morocco.
Taken together, the Spanish and Slovak ventures are planned to provide 37.5 GWh of annual battery-cell capacity. The companies say those cells are intended primarily to support Volkswagen’s European demand, while the Moroccan materials project is designed to feed the two European battery operations. That makes the plan more than three unrelated factory investments. It is a regional supply-chain design linking raw battery materials, cell manufacturing and a major automaker customer. The structure also spreads ownership: PowerCo would control the Spanish venture, while Gotion would hold control in Slovakia and Morocco.
Valencia Gets the Largest Share of the Investment
The largest piece is in Valencia, Spain, where the partners plan to invest about €2.262 billion in a battery-cell project with 29.1 GWh of annual capacity. Gotion would take a 49% stake in PowerCo Spain through a capital increase, while PowerCo would retain 51% and therefore control the joint venture. On the same day, Gotion disclosed plans for its Spanish subsidiary to sign engineering and construction contracts with PowerCo Spain worth a combined €1.094 billion, covering a dry-room package and a second phase of construction.
The new arrangement fits into a project Volkswagen has been developing for years near Sagunto, outside Valencia. PowerCo originally promoted the Spanish gigafactory with an initial capacity of 40 GWh and more than 3,000 direct jobs, positioning it as a major supplier to Volkswagen Group vehicle factories in Spain. The latest Gotion-linked transaction defines a 29.1-GWh joint-venture scope, so it should not automatically be treated as a full replacement for every earlier capacity figure. What is clear is that Valencia remains a central European battery asset and now appears set to be more tightly shared with Gotion.
Slovakia Adds Another Piece of Volkswagen’s European Supply Chain
In Šurany, Slovakia, the proposed structure flips the ownership balance. Gotion would hold 51% of a new joint venture and PowerCo 49%, with approximately €480 million earmarked for 8.4 GWh of annual lithium-ion battery capacity. The companies have said cells from the Slovak and Spanish projects would prioritize Volkswagen’s needs in Europe, although exact purchase volumes and supply guarantees are expected to be negotiated in later definitive agreements. That leaves some commercial details unresolved even if the ownership framework is approved.
The 8.4-GWh figure also needs context because the wider Šurany battery project has previously been described on a larger scale. Gotion InoBat Batteries, a venture between Gotion and Slovak battery company InoBat, had publicized an initial 20-GWh phase with potential expansion beyond that. Slovak government materials have likewise described a multibillion-euro-scale industrial plan with more than 1,000 jobs. The newest Volkswagen-linked disclosure therefore appears to define a specific joint-venture investment scope within a broader development. It would be misleading to assume the older 20-GWh target and the new 8.4-GWh figure refer to exactly the same commercial package.
Morocco Becomes the Materials Link
Morocco provides the upstream materials link. Gotion and PowerCo plan to invest about €480 million in a joint venture near Kenitra capable of producing 100,000 tonnes of lithium-iron-phosphate cathode material annually. Gotion would again hold 51%, with PowerCo taking 49%. The stated intention is for the Moroccan output to supply the battery ventures in Spain and Slovakia, giving Volkswagen and Gotion a more vertically integrated chain rather than relying entirely on materials shipped from Asia.
The location is significant because Gotion is already building a much broader battery manufacturing presence in Morocco. The African Development Bank approved a €100-million loan in July for an integrated Gotion Power Morocco project in the Rabat-Salé-Kénitra free-trade zone, with the bank describing an initial 10-GWh LFP cell-and-pack operation and plans for later expansion. Earlier project documents also referenced large cathode-material capacity at the site. For Volkswagen, taking a direct stake in the materials side could help secure supply for European production while Gotion gains a major automaker partner deeper inside its overseas manufacturing network.
Volkswagen and Gotion Have Been Building This Relationship for Years
Volkswagen and Gotion are not new partners brought together by the current battery cycle. In 2020, Volkswagen announced an investment of about €1.1 billion to acquire roughly 26% of Gotion High-Tech and become its largest shareholder. The deal made Volkswagen the first global automaker to invest directly in a Chinese battery supplier at that scale. A year later, the companies expanded their cooperation around industrializing battery-cell production and the unified-cell concept that Volkswagen intended to use across a large share of its electric lineup.
That history helps explain why the new joint ventures are structured as shared ownership instead of simple supplier contracts. Volkswagen gains access to Gotion’s manufacturing know-how and LFP expertise, while Gotion gains a powerful anchor customer and deeper participation in European projects. Volkswagen’s 2025 annual reporting continued to describe Gotion as a material associate tied to a strategic framework for battery-cell development, production and distribution. The September 2026 plan therefore looks less like an emergency pivot and more like a further integration of a partnership that has been built over several years.
Ontario’s Battery Plant Is Now a 2029 Project
The Canadian contrast is impossible to miss. PowerCo Canada confirmed on September 24 that its St. Thomas, Ontario, gigafactory is now expected to begin operations in 2029, two years later than the 2027 target announced when the project was unveiled. PowerCo said it is aligning the schedule and product strategy with changing market demand, technological development and Volkswagen Group’s longer-term plans. The later opening is also intended to allow the facility to accommodate next-generation battery technology while preserving flexibility over how quickly production capacity is added.
That wording matters because PowerCo has not described the change as a cancellation. The company says St. Thomas remains a cornerstone of its North American battery strategy and that construction is continuing while management decides how and when the plant should scale. Still, the new date changes the practical timeline for southwestern Ontario. A factory once expected to start making cells in 2027 will now wait until 2029 before operations begin, delaying the point at which the project can deliver the full manufacturing, supplier and employment effects that governments and local planners had anticipated.
Construction in St. Thomas Has Not Stopped
The Ontario site remains an active construction project. PowerCo named Canadian contractor EllisDon as general contractor as the project moved into core structural and infrastructure work. Current construction includes the production-building shell, mechanical, electrical and plumbing installations, energy and utility systems, and supporting site services. Roughly 60 EllisDon workers were reported on site at the time of the announcement, with that workforce expected to rise to about 1,300 at peak construction alongside people working on other project activities.
The long-term scale remains substantial. Volkswagen originally described St. Thomas as PowerCo’s largest gigafactory, with investment of up to C$7 billion and potential annual capacity of as much as 90 GWh in its final expansion phase. The project has also been associated with up to 3,000 direct factory jobs when fully developed. The latest 2029 announcement, however, did not restate a start-up capacity or spell out exactly how much of the previously announced 90-GWh maximum would be installed at launch. That makes the pace of future expansion almost as important as the revised opening date itself.
Billions in Public Support Make the Timeline More Important
The delay carries extra weight because the St. Thomas plant is tied to one of the largest public industrial-support packages in Canadian history. Federal records show a production-support agreement with PowerCo valued at up to about C$13.15 billion through 2032, while a separate federal contribution of C$700 million was committed toward capital costs. Ontario also pledged C$500 million in direct incentives and additional spending on regional infrastructure such as roads, utilities and public services around St. Thomas.
The headline subsidy number can be misunderstood. Ottawa and Ontario structured the large production incentives to depend on batteries actually being produced and sold, with support designed to mirror incentives then available under the U.S. Inflation Reduction Act. In other words, delayed production generally delays the point at which production-linked support can be earned; it is not simply a lump sum handed over regardless of output. The arrangement was designed to make Canadian battery manufacturing competitive with U.S. alternatives. A later launch therefore matters to governments not only politically, but also because the economic benefits and associated performance payments are tied to real factory activity.
Europe and North America Are Moving at Different Speeds
The different pacing in Europe and North America reflects two EV markets moving on different curves. In the European Union, battery-electric cars accounted for 21.7% of new registrations in the first eight months of 2026, up from 15.8% a year earlier, according to ACEA. Canada has also seen EV demand recover, but from a lower share: Statistics Canada reported zero-emission vehicles at 10.7% of new vehicle sales in July 2026. Those Canadian figures include both battery-electric vehicles and plug-in hybrids.
Volkswagen has already adjusted North American production to that less predictable market. In April, the automaker said it would stop building the current ID.4 electric SUV in Chattanooga, Tennessee, as it shifted factory attention toward higher-volume gasoline-powered SUVs. Reuters reported that the decision came amid a challenging U.S. EV market and after federal purchase incentives ended the previous fall. Against that backdrop, PowerCo’s decision to slow St. Thomas while deepening European battery partnerships looks less contradictory than it first appears. Volkswagen is matching battery investment timing to regional vehicle demand rather than running every factory on the same schedule.
Canada’s Test Will Be What Happens Between Now and 2029
For Canada, the overseas announcement is a reminder that winning a battery plant is only the first stage of an industrial strategy. Volkswagen and Gotion are willing to commit billions of euros to projects serving Europe, but those investments are also being split through joint ventures, staged funding and shared control. The new agreements still require corporate and regulatory approvals, and some supply terms will be finalized later. The structure shows an industry trying to reduce risk while still securing large amounts of future battery capacity.
St. Thomas remains part of that global system, and nothing in the current disclosures proves that Volkswagen is abandoning Canada or transferring its Canadian investment directly to Europe and North Africa. The more defensible conclusion is that Volkswagen is becoming more selective about timing, partners and scale. Ontario still has a major factory under construction, but its competitive value will increasingly depend on what happens between now and 2029: whether North American EV demand strengthens, which battery chemistry reaches the plant, how quickly production ramps, and whether the original employment and capacity ambitions ultimately materialize.
