The Canadian government will provide up to C$13.2 billion (€8.8 billion) over ten years to German carmaker Volkswagen to build its first electric battery plant outside of Europe in Canada.
Volkswagen had announced in mid-March its intention to build this plant in St. Thomas, Ontario, becoming the first new manufacturer to set up in Canada in 35 years. “The investment will depend on the number of batteries manufactured and will be between $8 billion and $13.2 billion,” the government said. This plant will create “3,000 direct jobs and up to 30,000 indirect jobs,” said Prime Minister Justin Trudeau, referring to a “historic step forward.
Work is scheduled to begin next year for a production start in 2027. This plant will be over 378 American soccer fields in size, making it the largest manufacturing facility in the country. It is expected to produce batteries “for up to one million electric vehicles per year,” according to a government statement. “Nationwide, the St. Thomas plant will be a national anchor in the electric vehicle supply chain,” Trudeau added at a press briefing.
Volkswagen is investing “$7 billion” in this plant, which is “the largest investment in the electric vehicle sector in Canada’s history. This investment by Europe’s number one automaker is a “huge vote of confidence in Canada” and “in the future of our automotive sector,” said François-Philippe Champagne, Minister of Innovation, Science and Industry, who expects a return on investment within five years.
“Canada has committed to provide Volkswagen with production support equivalent to the U.S. Inflation Reduction Act (IRA) Advanced Manufacturing Credit, or US$35 per kWh,” the statement said. Canada’s strategy is in line with that of its largest trading partner, the United States, whose major climate and inflation plan (IRA) includes billions in subsidies for green industries.
Canada “can not compete” at the “same level” but “we can be very strategic and we have been”, said Justin Trudeau.
In addition to Volkswagen, automaker Stellantis (formerly Fiat Chrysler) and LG Energy Solution have also partnered in 2022 to build a new battery plant in Canada, while French tire maker Michelin has expanded its facility there. In recent years, Canada has been working hard to attract players in the electric vehicle sector, touting its tax incentives, clean energy and abundant rare minerals.
