Volkswagen has revealed that they have chosen St. Thomas, Ontario, for their first EV battery cell plant, reported by Electrek. The news came following the company's reveal of its rugged electric SUV and pickup line Scout will build electric vehicles in South Carolina.
VW's North American Strategy
VW was among the automakers in the world looking to build and assemble TVs in the US following the passing of the Inflation Reduction ACT that will provide automakers with new tax credits.
VW and Mercedes-Benz signed a Memorandum of Understanding (MOU) to secure critical resources for EV battery cells. According to VW, they will speed up the manufacturing process through PowerCo.
VW establishes PowerCo is and is its own subsidiary that will handle its battery operations. PowerCo will open six EV battery cell plants through VW with 240 GWh combined capacity by 2030.
PowerCo's first better cell plant will be in Germany, with production planned for 2025. Their second battery plant will be established in Spain.
North America is part of VW's 10-point strategy to boost its EV sales and profitability. It believes that building a battery cell plant in North America will allow them to claim $10 billion in subsidies and loans through the IRA bill over the plant's lifetime.
Why Canada for VW's First EV Battery Cell Plant
Based on a press release by the automaker, Ontario offers the best conditions for VW's battery cell plant outside Europe. This includes the abundance of raw materials and access to clean energy.
The EVs will be equipped with sustainable unified cells, and production will start in 2027. VW expects to produce over 200,000 Scout vehicles, with production to begin in 2027.
There are not many details about the planned gigafactory, but VW says they will reveal more information on the St Thomas factory soon.
VW plans to introduce over 25 new TVs, such as the ID.4, through 2030. They also plan to upgrade some of their plants in Mexico to allow EV assembly and potentially produce EV components in the second half of the decade.
A Vote of Confidence in Ontario
The new plant could also generate over 2,000 direct jobs and up to 7,500 jobs, including indirect ones.
Ontario recently passed legislation that would allow the City of St. Thomas to annex 607 hectares of farmland from the Municipality of Central Elgin. The goal is to turn the parcel into industrial lands as part of what it called an investment "mega-site."
Being a manufacturer-new to Canada, VW's decision to establish their battery cell plant here is a vote of confidence for the province. By the time the plant is built, it will likely feed at least three other EV manufacturing plants in North America.
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