Volkswagen Picks Canada for First North American Battery Cell Plant

Photo: Volkswagen

European automaker Volkswagen stands to gain access to new electric vehicle (EV) subsidies in North America as it prepares to build its first battery cell plant on the continent.

Volkswagen is set to build its first North American battery cell plant in Canada, as announced on Monday and reported Reuters.

The plant will also allow Volkswagen to gain access to both Canadian and U.S. EV subsidies after the automaker signed a memorandum of understanding with the country’s government for access to raw materials to help establish a local supply chain.

Canada has a huge mining sector for minerals necessary to electric vehicle (EV) batteries including cobalt, nickel and lithium.

Additionally, Volkswagen’s EVs at the plant are set to begin qualifying for thousands in subsidies from the U.S. Inflation Reduction Act (IRA) to help incentivize consumers to go electric. The eligibility is available to companies with plants in U.S. free-trade agreement countries, or those that are recycled in North America.

François-Philippe Champagne, Canada’s Minister of Innovation, Science and Industry, and Vic Fedeli, Ontario’s Minister of Economic Development, Job Creation and Trade, issued the following joint statement today.

“Earlier today, Volkswagen announced that it has selected St. Thomas, Ontario, Canada, as the location to build the company’s first overseas battery cell plant. Today’s news is a major vote of confidence in Canada and Ontario, and in our shared work to position the country and the province as a global leader on the electric vehicle supply chain.

“This historic investment is a testament to Canada’s strong and growing battery ecosystem and Ontario’s competitive business environment. With a highly skilled workforce, clean energy, an abundance of critical minerals, access to markets, and a flourishing automotive and battery sector, we are an attractive investment destination with everything companies need to grow. In addition, Canada and Ontario offer stability and predictability to their business partners.

“This investment is another significant step forward as we build a clean transportation sector to meet global and North American demand for zero-emission vehicles.

“We will continue to build on this success by growing our EV ecosystem and supporting clean technology to create well-paying jobs and spur economic growth and prosperity for future generations.”

The U.S. Department of the Treasury is expected to share more information about the eligibility requirements later this month.

The news comes after Volkswagen shrunk its management board by a third last year, with former CEO Herbert Diess being replaced by Oliver Blume.