By Sharon Terlep

ST. CLAIR, Mich. -- At first, North America's biggest auto-parts supplier was thrilled to snag the job of making enclosures for the batteries in General Motors' new electric pickup. The contract was so big -- and promised to be for years to come -- that Magna International built a new factory in a Michigan cornfield.

Five years later, that million-square-foot plant is mostly empty and losing money, a casualty of America's messy breakup with electric vehicles. It is one of dozens of now desolate or sparsely used EV parts plants across the country.

Now the war in Iran has driven gas prices up so sharply that EV enthusiasts are daring to wonder whether U.S. car buyers are willing to give the vehicles another look. But Magna and its big Detroit customers are forging ahead with plans to roll back EV investments.

It can take years to pivot a factory and supply chain from one type of vehicle to another. And it would take four to six months of higher gas prices for most Americans to reconsider more fuel-efficient vehicles, said Paul Jacobson, GM's chief financial officer. "We certainly don't see it today," he said recently. GM said this week it would idle the Detroit factory where it builds the big electric trucks that Magna supplies, due to weak demand.

"The magnitude of uncertainty is unparalleled," said Magna Chief Executive Swamy Kotagiri, who joined the company as an engineer in 1999 and has run it since 2021. A Magna team recently walked through the St. Clair EV parts factory trying to figure out what equipment might be repurposed. It will take 18 to 24 months, the company figures, to find new customers and get enough production to be profitable again.

Shareholders have cheered the decisions by Detroit automakers to scrap their boldest EV dreams -- looking beyond $50 billion in charges tied to broken supplier contracts and wasted investments . Many of the hundreds of workers hired and then laid off by Magna in St. Clair have had other job opportunities with nearby factories looking for workers.

It is Magna, which has more than 300 factories around the globe and parts in nearly every car on the road today, that has been left holding the keys to a largely deserted St. Clair building that is bigger than 20 football fields. The company, based outside Toronto, needs to find a second life for the factory and the hulking rows of assembly-line robots it spent roughly $575 million setting up.

Answers aren't easy when the biggest automakers disagree over what Americans will be driving even a few years from now. Trump administration policies and tariffs have cost automakers billions and continue to sow uncertainty. Automakers no longer face the strict Biden-era fuel-economy rules that once spurred production of more electric models. Ford has killed its electric F-150 truck and is shifting to gas-electric hybrids and plug-in vehicles while it tries to crack the code on cheap EVs. GM is keeping its electric trucks even as demand craters, and CEO Mary Barra has made a case against hybrid vehicles.

A few years ago, Magna had plans to build an entirely new business unit around EV battery enclosures, one that Kotagiri predicted would eventually deliver $2.5 billion a year in revenue. In a recent interview, he said he still believes EVs will take hold in the U.S. as they have elsewhere in the world, but he's making no guess when that will happen.

Warfare in the Middle East has only ratcheted up the uncertainty. While a prolonged stretch of pricey gas could renew interest in EVs, it also could further slow overall sales of all vehicles if cash-crunched consumers respond by putting off new purchases. Last Thursday, research firm J.D. Power estimated that overall vehicle sales would fall more than 10% in March, compared with a year ago, with EVs losing market share.

The unpredictability is reverberating through the automotive industry's sprawling supply chain. Multinational companies such as Magna, Dana and BorgWarner slashed jobs and closed plants due to the EV pullback, while a string of smaller manufacturers shut down altogether. Last year, more than $20 billion in previously announced investments in EV and battery facilities were wiped out, according to Atlas Public Policy, which tracks clean-economy investments.

"They can't plan. It's just chaotic and hard to make any kind of a move, " said Catherine Karol, a lawyer at Butzel, a Detroit law firm that represents auto-parts suppliers. Uncertainty over not just the future of EVs but tariffs and a weakening U.S. auto market has immobilized many suppliers, she said.

Smaller suppliers in particular have little recourse to recoup costs when automakers cancel a vehicle program and stop buying parts, Karol said. "They're basically SOL," she said, because a supplier typically absorbs the upfront cost of setting up an assembly line with the expectation of recouping it over time as parts are shipped.

In St. Clair, Magna has opened its facility to tours by other automakers and suppliers, hoping to lure new business to occupy empty swaths of the factory floor. Outside, freshly laid parking lots sit mostly empty while a single, shrunken shift of workers comes and goes. Local officials and business owners buzz whenever corporate scouts are spotted about town checking out the plant.

"We did everything right," said St. Clair Mayor Bill Cedar, who was part of an effort to woo Magna with tax breaks and the construction of a new water tower to supply the facility. He worries about how long it will take to replace the GM business and what the lack of work means for the city's bottom line. "Maybe the government should be slower to espouse programs that it thinks will be the new wave," he said.

EV boom

At the start of the decade, EVs occupied a small but fast-growing corner of the U.S. auto market. Just 2% of vehicles sold in the U.S. in 2020 were EVs, nearly 80% of them made by Tesla. The Biden administration gave the EV market a big boost, offering $7,500 tax credits to buyers and implementing stricter federal air-quality mandates.

The rest of the industry wanted in. Between 2022 and 2025, the U.S. auto industry invested some $200 billion into new EV and battery factories. Suppliers raced to get a piece of the business.

Magna was all in. The 70-year-old parts maker based in Aurora, Ontario, has 156,000 employees in dozens of countries producing everything from seat frames to vehicle software. The company had been working on EVs for years before they started to take off, and it played an important role in developing Ford's electric Focus more than a decade ago.

Magna executives were counting on entirely new EV parts, such as the battery containers the company would make for GM, and the fact that components for EVs are often pricier than those for gas-powered vehicles. A traditional all-wheel-drive system required about $450 in parts, Kotagiri said in 2022, while a so-called e-drive system used in EVs required $800 to $1,200.

Kotagiri told investors at the time that EVs were projected to deliver $4.5 billion in sales within a few years, a significant boost for a company that notched $42 billion in revenue in 2025. EV growth globally and in the U.S., he said, was inevitable, but would take place over the long term, not in a single burst.

At the time, the EV market in the U.S. was dominated by Tesla's sporty cars and smaller models such as Nissan's compact Leaf. GM and Ford had a different idea: Instead of crowding the market with more small cars, they would launch electric versions of their pickup trucks. Executives reasoned that trucks are what Detroit does best, and they would command sticker prices high enough to cover the production and development costs of a new EV line.

Magna won the job of building the metal box that would hold and protect the battery for GM's first electric truck: the Hummer EV. It put out word that it was building a factory and needed a site. Dozens of communities lobbied to be the place.

St. Clair was Magna's pick in part because of a $44 million incentive package offered by state, county and city governments. The town of 5,500 sits in a region of Michigan where the economy largely relies on manufacturing. Employment in the county surged during the tech boom of the 1990s, then sank amid the 2009 recession, when joblessness exceeded 25%. The unemployment rate now is 5%, and manufacturers in the area struggle to find enough workers.

The town, less than an hour north of Detroit, had a leg up in the contest for Magna because the land where the factory now stands had been partially set up as an industrial site two decades ago, aiming to attract new business.

GM, trying to catch up with Tesla, rolled out a $7 billion plan in 2022 to expand EV capacity and build up a supply chain. Big electric trucks were the centerpiece of GM's plan. The automaker said at the time it aimed to build 600,000 a year in North America by 2025.

GM initially pressed Magna for more capacity in St. Clair than the supplier was willing to build, according to people familiar with the matter. The companies eventually compromised, the people said, with Magna boosting the planned capacity and GM agreeing to shoulder more of the factory setup costs. They also agreed that GM would pay a higher rate for parts if demand fell short of projections.

A main section of the Magna factory opened in early 2022 and started churning out parts. The trucks garnered substantial buzz and preorders. GM announced it would follow the Hummer with an electric version of its Chevrolet Silverado pickup.

Demand disaster

The sales boom never came. Last year, GM sold just over 11,000 Silverado EVs.

"We had rows and rows of battery trays. We were just boxing them up and throwing them in warehouses," said Daniel Martin, a former production supervisor at the factory. "I kept saying, 'What will happen if this falls through?' "

Martin watched as workers were laid off in waves, sometimes rehired, then laid off again. Eventually his job was cut. The plant, which was supposed to employ 900 workers, is down to a few hundred.

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March 31, 2026 20:00 ET (00:00 GMT)

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