The Canadian government will grant up to 13.2 billion dollars over ten years to the German car manufacturer Volkswagen for the construction of its first electric battery factory outside Europe, in Canada.
Volkswagen had announced in mid-March its intention to build this plant in Saint-Thomas, Ontario, thus becoming the first new manufacturer to settle in Canada in 35 years. Quebec had also been considered for the establishment of this plant.
“The investment will depend on the number of batteries manufactured and will be between 8 billion and 13.2 billion dollars,” 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 breakthrough.”
Work is due to begin next year, with production starting in 2027.
This plant will cover an area of more than 378 American football fields, the largest manufacturing plant in the country. It should make it possible to produce batteries “for a million electric vehicles per year at most”, according to a government press release.
Production support
“Across the country, the Saint-Thomas plant will be a national anchor in the electric vehicle supply chain,” added Mr. Trudeau during a press briefing.
Volkswagen is investing “7 billion dollars” in this plant, “the largest investment in Canadian history in the electric vehicle sector”.
This investment by Europe’s number one car manufacturer is a “huge vote of confidence in Canada” and “in the future of our automotive sector”, declared François-Philippe Champagne, Minister of Innovation, Science and of Industry, which foresees a return on investment within five years.
“Canada has committed to providing Volkswagen with production support equivalent to the Advanced Manufacturing Credit from the[Inflation Reduction Act (IRA)] from the United States, or US$35 per kWh,” the statement said.
Ottawa’s strategy is in line with that of its largest trading partner, the United States, whose major climate plan and against inflation (IRA) provides billions in subsidies for green industries.
Canada “cannot compete” at the “same level”, but “we can be very strategic and we have been”, welcomed Justin Trudeau.
Besides 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 facilities there.
For the past few years, Canada has been pushing hard to attract players in the electric vehicle sector, touting its tax incentives, clean energy and many rare minerals.