The company, which is building a factory to produce battery parts for electric vehicles near Kingston, Ontario, announced that it will postpone construction after starting in 2023, citing slowing sales of electric vehicles.
Umicore Rechargeable Battery Materials said in a statement to CBC News on Friday that the Loyalist Township project is being affected by a “significant deterioration in the EV market environment and its impacts across the supply chain.”
The project was expected to cost up to $2.76 billion in total and create 600 jobs in the region by 2023. The federal government was set to invest up to $551.3 million, according to a news release from Innovation, Science and Economic Development Canada at the time.
The state was set to pay up to $424.6 million, but a source familiar with the project said Umicore had not received any state funding as of Friday.
Umicore cited one situation when it announced on June 12 that a deal with a Chinese manufacturer had not materialized: The company said previous contracts were declining faster than expected and that “contract growth” in Europe had slowed.
“Umicore has recently experienced a sharp decline in forecast customer demand for our battery materials,” the statement said.
The company said it was realigning its business “to align with new market realities,” adding that this included a “top-to-bottom review” of its battery materials business.
The company plans to announce the conclusions of its review at its capital markets day in the first quarter of 2025.
Graig Mordue, an associate professor of engineering at McMaster University, said both the federal and provincial governments wanted to get into the market quickly.
“They wanted to be first. That’s fine if you’re creating a market, but the reality is that Canada’s auto industry is made up of suppliers and affiliates of globally owned companies,” Mordue said.
Mr Mordue said governments have spent tens of billions of dollars and pledged investments, but the industry isn’t there yet.
He said Umicore is not the only company pausing to assess its position and wait for the market to catch up; Ford also recently EV production scaled back.