Volkswagen chose Canada to build its first battery cell plant outside Europe, giving its cars access to both Canadian and U.S. subsidies.
Volkswagen AG confirmed in December it was looking for sites for a Canadian plant, six months after signing a memorandum of understanding with the country to secure access to key raw materials for batteries.
The announcement was made on Monday by Volkswagen and Ontario’s minister of economic development and trade. The European automaker announced that the Volkswagen Group and its battery company PowerCo will establish its first overseas “gigafactory” for battery cell manufacturing in St. Thomas, on Talbot Line near Yarmouth Centre Road, close to the city’s airport, according to CBC Canada.
Canada is home to a large mining sector for minerals including lithium, nickel, and cobalt, offering ideal conditions, including a local supply of raw materials, and wide access to clean electricity.
VW joins a Stellantis NV and LG Energy Solutions joint venture in building an EV battery supply chain in Windsor, Ontario, Canada, as European car makers seek to benefit from a U.S. climate law that requires 50 percent of EV battery components be made in North America for vehicles to qualify for tax credits of up to $7,500.
The joint venture company will invest over $5 billion CAD ($4.1 billion USD) to establish operations, which will include the battery manufacturing plant. Plant construction activities are scheduled to begin later this year with production operations planned to launch in the first quarter of 2024.
“Canada and Ontario are perfect partners for scaling up our battery business and green economy jobs, as we share the same values of sustainability, responsibility, and cooperation,” Thomas Schmall, chairman of the supervisory board of PowerCo SE said in a statement.
“Our gigafactory in Canada sends a strong message: PowerCo is on track to become a global battery player. With the expansion to North America, we will enter a key market for e-mobility and battery cell production, driving forward our global battery strategy at full speed.
Ontario Economic Development Minister Vic Fedeli said Canada has gone from being behind the pack in the electric vehicle manufacturing sector to being one of the top players in the battery supply chain remarkably quickly.
“(It) is a stunning move, and I think acknowledged by Volkswagen that they felt they would want to be in the middle of this whole electric battery ecosystem that we’ve created in Ontario,” Fedeli said in an interview, according to CTV News.
