Volkswagen Group has announced that it will build its first overseas battery cell plant in St. Thomas, Ontario, marking a significant move towards the automaker’s expansion in North America.
The automaker had been considering locations across North America, but Ontario was the only Canadian jurisdiction under consideration. The decision comes as Volkswagen continues to prioritize the development of electric vehicles.
The company signed a memorandum of understanding (MOU) with the federal government in August. Volkswagen immediately followed the MOU by announcing the opening of an arm of its subsidiary battery company, PowerCo Canada, in Toronto.
“This is a home run for Canada,” says Innovation, Science and Industry minister François-Philippe Champagne.
“This is the largest single investment in the history of the auto sector in Canada. Ever. It’s multi-billion.”
According to Champagne, the sales pitch for Canada hits five points. These are talent, ecosystem, critical minerals, renewable energy and access to markets.
But Ontario officials believe that the province’s supply chain is the most powerful lever in attracting foreign investment. The province has access to every critical mineral needed to build a lithium-ion battery. However, the key condition for Volkswagen’s investment is that these minerals must be processed in the province.
A handful of questions remain like how much the factory will cost, and what its capacity will be. Also, how many jobs will be created.
But both the Ontario and federal governments have made no secret of their ongoing efforts to woo Volkswagen to locate a battery factory here.
“VW’s decision to establish its first overseas gigafactory in Canada speaks to our country’s competitiveness when it comes to attracting major investments,” said Champagne, in a press release.
“It is also a vote of confidence in Canada as the green supplier of choice to the world.”
⚡🔋⚡ BIG #BATTERY NEWS: We will build a new plant in #Canada! 🇨🇦 Our first overseas gigafactory will come to St. Thomas #Ontario. PowerCo is on track to become a global battery player! 💪🤠 #NEWAUTO pic.twitter.com/uxcCFiiBES
— Volkswagen Group (@VWGroup) March 13, 2023
Volkswagen decision comes after months of deliberation
For Ontario, Volkswagen’s decision to build its battery cell plant in the province is the latest in a growing series of major international investments into its electric vehicle battery supply chain.
Last year, Ontario secured a $5 billion battery factory deal from Stellantis and LG Energy Solutions in Windsor, while in February, Umicore announced a $1.5 billion pre- and cathode active material (CAM) factory near Kingston.
“Volkswagen’s historic investment is a testament to Canada’s strong and growing battery ecosystem and Ontario’s competitive business environment,” reads today’s government statement.
“With a highly skilled workforce, clean energy, an abundance of critical minerals, access to markets, and a flourishing automotive and battery sector, we are an attractive investment destination with everything companies need to grow.”
VW has yet to announce further details on when it will begin constructing its plant.