• VW's first North American battery cell plant will be built in St. Thomas, Ontario.
• The plant will be operational by 2027.
• Volkswagen's decision is part of its major growth strategy in electrification.
It was an open secret, but the confirmation from VW was still missing. The open secret being that Volkswagen has chosen the site for its first major battery plant in North America. Now it’S official: the mega-factory will be built in Canada, more precisely in the city of St Thomas, located in Ontario.
The plant is a joint venture between Volkswagen and PowerCo, a new independent company created by the automaker to oversee its battery initiatives. Its value is estimated at $20 billion.
According to Volkswagen, St. Thomas offers “ideal conditions for PowerCo's first battery plant outside Europe.” The plan will, of course, take advantage of Canada's great strength: access to abundant raw materials, as well as clean, green electricity.
The news is major, as this is only Volkswagen's third mega-battery plant after Salzgitter, Germany, and Valencia, Spain.
All of this, of course, is part of the company's plan to introduce just over 25 new electric vehicles worldwide by 2030.
We know that Volkswagen is already assembling an electric model in Chattanooga (Tennessee) in the United States, the ID.4 SUV. Eventually, the plant should be able to produce the ID. Buzz as well. Volkswagen also plans to upgrade its facilities in Puebla and Silao, Mexico, to assemble all-electric vehicles and eventually make electric motors.
The work of Canada's Minister of Innovation, Science and Industry, François-Philippe Champagne, on this dossier is worthy of mention. Recall U.S. President Joe Biden's Inflation Reduction Act, which provides significant incentives for automakers to move their battery manufacturing facilities to the United States. Companies building battery cell manufacturing and assembly facilities were offered billions of dollars if they set up south of our border.
Which goes to show how much value Canada has to offer.
Said Minister Champagne, “Today’s announcement by Volkswagen is a true testament to our highly skilled workforce and Canada’s strong and growing battery ecosystem. VW’s decision to establish its first overseas gigafactory in Canada speaks to our country’s competitiveness when it comes to attracting major investments.”
Volkswagen expects the southern Ontario plant to begin production in 2027.
For Volkswagen, this announcement I s cause for celebration as well. CEO Oliver Blume had this to say: “Our North American strategy is a key priority in our 10-point plan that we laid out last year. With our decision to produce cells in Canada and the upcoming Scout plant in South Carolina, we are accelerating the execution of our North American strategy.”
Of course, the other good news is the job creation that comes with this announcement. And there is surely more good news to come. As you may recall, in addition to Volkswagen, Mercedes-Benz has also been negotiating a possible deal with the Canadian government.