Volkswagen’s First North American Battery Plant Will Be Canadian

Following news that Volkswagen was far more enthusiastic about establishing battery plants in North America than in Europe, we have confirmation on the location of the automaker’s next cell manufacturing facility. It will be located in St. Thomas, Ontario. Despite scattered assumptions that VW’s recent praise of the Biden administration’s EV incentive scheme would signal another factory based in the United States, setting up shop in Ontario should still satisfy regional supply chain needs to manufacture electric cars under the provisions outlined in the USMCA.

Though Canada never appeared to be out of the running, suggesting that VW may have been lauding subsidies outlined in the so-called Inflation Reduction Act (IRA) just to negotiate more favorable terms inside of Europe. The automaker had signed a memorandum of understanding with the Canadian government to build a battery plant last summer and had confirmed its feelings had not changed going into 2023.

Earlier promises that Volkswagen would build a $2-billion EV assembly plant in Blythewood, South Carolina, likely means the Canadian facility will serve as its regional battery supplier. The plant is said to be responsible for battery electric crossovers and pickups under VW’s new Scout Motors brand. Canadian batteries may also eventually make their way to VW’s plant in Chattanooga, Tennessee, which builds the ID.4 crossover and is poised to deliver an even bigger all-electric model to potentially supplant the Atlas.

Since these vehicles will likely be using Canadian batteries, they should all qualify for IRA subsidies inside the United States.

Earlier in the month, Automotive News reported that Vic Fedeli, Ontario’s minister of economic development, job creation and trade, said that redistricting the Canadian worksite was the final component needed to “lure” big investors back to the province.

From Automotive News:

The site for the new plant in St. Thomas is book ended by two railway lines, and has strong highway and utility links, according to the St. Thomas Economic Development Corp., which has spent about two years assembling the greenfield development site.

The 1,500-acre plot of land sits at the northeastern edge of the city, and until March 2 was partially part of the neighboring municipality of Central Elgin. Provincial legislation redrew the borders around the city earlier this month, putting the entire site within St. Thomas.

Though the area’s status as a shipping hub and Canada having access to the relevant minerals (e.g. lithium, nickel, and cobalt) undoubtedly play just as important of a role. The same could be said for the nation’s multi-billion dollar green technology fund that’s designed to convince companies using the preferred environmental jargon to invest.

"This is a home run for Canada ... when you have a home run like that, you have to celebrate and say, 'Yes, we won'," Canadian federal Innovation Minister Francois-Philippe Champagne told reporters on Monday – adding that this would represent the largest single investment by the automotive sector in Canadian history.

We’ll have to see how true that turns out to be once VW has shared all the details. As of now, we only know that the company has settled on a location and that the Canadian government seems incredibly happy with that decision.

[Image: HJBC]

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