Volkswagen Group has committed to building its first North American battery factory in southwestern Ontario, Canada.
The announcement is undoubtedly one of the biggest milestones in Canada’s efforts to establish itself as a major part of the electric vehicle manufacturing process.
Volkswagen said it and its battery partner PowerCo had considered locations in both, the United States and Canada, and finally decided to go with a location in St. Thomas, Ontario. The gigafactory is expected to start production sometime in 2027.
“Today’s announcement by Volkswagen is a true testament to our highly skilled workforce and Canada’s strong and growing battery ecosystem,” said François-Philippe Champagne, Canada’s Minister of Innovation, Science and Industry.
Industry insiders had previously speculated that the U.S. was offering more incentives to automakers to invest in the country through the Inflation Reduction Act. It’s currently unknown exactly how much money the federal and Ontario governments are putting up for the project. For other projects in the country, including Stellantis NV and LG Energy Solution in Windsor, the governments have put up roughly $1 billion.
Canada has been cited as an attractive location for automakers due to its supply of critical minerals, labour market advantages, and clean-electricity supply. The new commitment by Volkswagen significantly bolsters Canadian claims to be able to establish a full EV supply chain in the country, all while accelerating mining plans and creating opportunities for smaller domestic manufacturers, such as parts suppliers.
“Our North American strategy is a key priority in our 10-point-plan that we’ve laid out last year. With the decisions for cell production in Canada and a Scout site in South Carolina we’re fast-forwarding the execution of our North American strategy,” said Oliver Blume, CEO Volkswagen Group.
Image credit: Volkswagen