Toronto 
Volkswagen has announced a $7 billion investment to establish its first overseas electric vehicle (EV) battery manufacturing plant in St. Thomas, Ontario, which will be the largest electric vehicle-related investment in Canadian history.
Credit: Cesar Salazar/ Unsplash
While the deal was announced last month, the highlights of the agreement were officially revealed in St. Thomas today by Prime Minister Justin Trudeau and Premier Doug Ford.
Per the news release, the plant will cover an area of approximately 370 acres equivalent to which is larger than 378 American football fields and will be the largest manufacturing plant in Canada. It will create up to 3,000 direct jobs and 30,000 indirect jobs, producing batteries for up to one million EVs annually. The construction of the plant is expected to begin in 2024 and complete in 2027.
The federal government has committed to providing Volkswagen with production support matching the United States Inflation Reduction Act’s (IRA) Advanced Manufacturing Production Credit, equalling USD$35 per kWh. The support will phase out by 25 percentage points every year beginning in 2030 and will be eliminated by 2032. The agreement also has the flexibility to be adjusted should the U.S. Advanced Manufacturing Production Credit change in the U.S. According to BNN Bloomberg, this equals around $13 billion (US$9.7 billion) over 10 years.
The investment is part of an overall electric vehicle battery investment partnership by Canada and Ontario. The full economic impact of the project is projected to be equal to the value of government investment in less than five years.
Ontario is providing $500 million in direct incentives to Volkswagen and investing hundreds of millions of dollars more in strengthening and growing St. Thomas and the surrounding communities, including infrastructure improvements to roads, railways, water, electricity, police, and fire safety.
Ontario’s Minister of Economic Development, Job Creation and Trade, Vic Fedeli, said in a statement, “Last October, we met with Volkswagen in Germany to discuss the possibility of a new EV battery manufacturing facility. Six months later, we’re proud to say this potential will become a reality. Volkswagen’s historic investment will strengthen our end-to-end electric vehicle supply chain and create more good-paying jobs for workers in St. Thomas and across the province.”
According to the news release, Canada’s automotive sector supports over 500,000 workers and contributes $16 billion annually to Canada’s gross domestic product, with nearly 100,000 auto plant workers in Ontario.
Ontario’s auto supply chain is comprised of over 700 parts firms, over 500 tool, die and mold makers, and over 300 connected and autonomous companies. The province is the only place in North America where five major automakers build their vehicles, including Honda, Toyota, Ford, General Motors, and Stellantis.
