German automaker Volkswagen has announced that it has selected St. Thomas, Ontario, as the site for its first North American EV battery cell plant. This move comes after the company revealed plans to produce electric SUVs and pickups in South Carolina. The initiatives are part of Volkswagen’s broader North American EV strategy.
After the US passed the Inflation Reduction Act last August, Volkswagen joined several other global automakers in looking to build and assemble EVs in the country to take advantage of the new tax credits. The company also signed a memorandum of understanding with fellow German automaker Mercedes-Benz to secure vital resources such as lithium, nickel, and cobalt for EV battery cells in the raw-material-rich nation.
See also: Volkswagen to invest $20 billion in electric vehicles battery business with capacity of 240 GWh
Volkswagen established PowerCo, a 100% owned subsidiary, in July 2022 to handle the automaker’s battery operations. Through PowerCo, the company plans to open six EV battery cell plants with a combined capacity of 240 GWh by 2030. The first PowerCo battery cell plant will be in Salzgitter, Germany, with production planned for 2025, while the second is planned for Valencia, Spain. However, Volkswagen recently shifted its plans, prioritizing a North American plant to take advantage of incentives from the IRA bill.
According to Volkswagen’s press release, Ontario offers the ideal conditions for its first PowerCo battery cell plant outside of Europe, including abundant raw materials and access to clean energy. The company plans to equip its Group EVs with sustainable unified cells, with production expected to begin in 2027. Volkswagen expects to produce over 200,000 Scout vehicles in South Carolina, with production slated to begin in 2026, and may also produce Audi EVs at the site.
Volkswagen CEO Oliver Blume said that North America is a key part of its 10-point strategy unveiled last year to accelerate EV sales and profitability across its lineup. Volkswagen selected North America over Europe for its third EV battery cell plant because it believes it can claim upwards of $10 billion in subsidies and loans through the IRA bill over the lifetime of the plant.
Details of the planned gigafactory are currently scarce, including production capabilities. However, Volkswagen says that more details on the St. Thomas factory will be revealed in the near future. The company is planning to introduce over 25 new electric vehicles, including the ID.4, through 2030. Volkswagen also plans to upgrade several plants in Mexico to assemble EVs and potentially produce EV components like electric motors in the second half of the decade.
