Battery sector | We can forget Volkswagen in Quebec

Quebec can forget Volkswagen and its battery plant for electric vehicles. It is a little further west – in Ontario – that this megaproject should see the light of day if negotiations succeed between Ottawa and the German multinational, was able to confirm The Press. The Legault government is already resigned.

In fact, the province has never really been in the race even if the German manufacturer has refrained, for the moment, from sending signals on this subject.

“The plant is going to be built in Ontario,” says The Press a government source familiar with the matter, but who is not authorized to speak publicly. Quebec was too far behind Ontario. »

Volkswagen lifted the veil on its intentions on 1^er last December after welcoming the Minister of Innovation, Science and Industry, François-Philippe Champagne. The latter had met the board of directors of the multinational based in Wolfsburg.

The agreement between the Trudeau government and the German giant takes the form of a non-binding agreement. This means that there are still many steps to go through before we see a proper announcement.

Sign that the negotiations will accelerate, Volkswagen has just registered in the federal register of lobbyists.

According to the company’s profile, it is requesting a “subsidy”, a “contribution” or “any other financial benefit” to potentially set up a “raw materials manufacturing and supply plant”. However, the company’s name does not yet appear in the Ontario lobbyists registry.

This battery factory, if it sees the light of day, would be the first built by Volkswagen outside the European continent. Its chief executive, Oliver Blume, pointed out on 1^er last December, that Canada was a “logical option” to host the North American complex envisaged by the automaker.

Lobbying efforts should be made with Mr. Champagne’s department, the Prime Minister’s Office, the Business Development Bank of Canada and the Canada Infrastructure Bank, in particular.

A fertile ground

According to our information, the colossal investments of the Ford government announced in the automotive sector in the last year – in concert with Ottawa – in order to accelerate the transition to the construction of zero-emission vehicles play in favor of Ontario.

If the Legault government repeats that it speaks to all players in the automotive sector about the battery industry, it concedes that the chances of seeing Volkswagen settle in Quebec are very slim.

“It’s possible it’s Ontario,” said The Press the Minister of Economy, Innovation and Energy of Quebec, Pierre Fitzgibbon, questioned on the subject during a recent interview.

The concentration of the automobile industry in the neighboring province gives it a “comparative advantage” over Quebec, admits Mr. Fitzgibbon. Ontario was the first province to host an electric car battery plant. Last March, Stellantis and LG announced a $5 billion resort in the Windsor area. This type of project presents energy supply issues. However, Ontario intends to turn to small modular reactors in order to produce “safe and reliable” and “emission-free” energy, which would allow it to guarantee volumes to players in the battery sector.

Mr. Champagne’s statements suggest that Canada is guaranteed to obtain Volkswagen’s North American plant to manufacture batteries. It remains to be seen whether the Biden administration’s Inflation Reduction Act (IRA) could spoil the party. This law is endowed with an envelope of 370 billion US to finance in particular everything surrounding the production of batteries for electric vehicles.

Ottawa sees the IRA as a threat, but it is not yet clear how its response will be articulated. The Trudeau government’s plan should be included in the content of the next federal budget.