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Volkswagen chooses Canada for new battery plant

German automaker Volkswagen is continuing its transition to electric mobility by announcing the opening of its first battery plant in North America, in Canada. This decision comes against a backdrop of competition with world leader Tesla and the race for subsidies on both sides of the Atlantic.

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German auto giant Volkswagen announced Monday that it will locate its next battery plant in Canada, without revealing its plans for Europe. The plant, scheduled to open in 2027 in the province of Ontario, will be the first of its kind in North America. For Volkswagen, this market is one of its “top priorities”, said Oliver Blume, CEO of Volkswagen. The company is injecting tens of billions of euros into the production of electric cars and wants to become the first European manufacturer to make its own batteries in order to reduce its dependence on Asian manufacturers, where China and Korea are leaders. However, Volkswagen is facing competition from Tesla, the world’s leading manufacturer of electric vehicles and battery producer.

Battery factory projects in Europe on hold

Volkswagen has already announced three battery factory projects in Europe. The first one, in collaboration with manufacturer Northvolt, is scheduled to open in Sweden in 2023, followed by another in Salzgitter, Germany in 2025. The third one is planned in Valencia, Spain. Volkswagen announced last year that it would open a total of six battery plants in Europe, but these projects are still on hold. Thomas Schmall, CEO of Volkswagen’s components division, said during a press tour of the Salzgitter plant that the location decision for the next battery plant would be announced “in due course”. He also stressed that the group would “need more than three” battery plants in Europe and that the decision to build six would depend on the environment.

Multinationals prefer the United States

European multinationals fear that investment in the continent will be jeopardized in favor of the United States, where Joe Biden’s great climate and anti-inflation plan provides billions in subsidies for green industries. In early March, Volkswagen announced that its subsidiary Scout Motors would invest $2 billion in building an electric pickup and SUV plant on the U.S. East Coast. “We now have a unique opportunity to grow profitably in North America and play a key role in the transition to electric mobility in this region,” said Arno Antlitz, group CFO. Volkswagen plans to introduce more than 25 new electric models in the United States by 2030.

Volkswagen’s decision to build its next battery plant in Canada strengthens its presence in North America. However, its plans for Europe are still on hold, as competition for subsidies rages on both sides of the Atlantic.

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