Volkswagen to build EV battery plant in southwest Ontario

Volkswagen to build EV battery plant in southwest Ontario





Allison Jones, The Canadian Press







Published Monday, March 13, 2023 12:18PM EDT






Last Updated Monday, March 13, 2023 4:59PM EDT

Ontario’s economic development minister stood on the roof of a Volkswagen facility in Germany in October, overlooking a sprawling electric vehicle battery plant under construction, and had a “good feeling” the province could soon land one of its own.

Hours after the automaker announced Monday that it would build its first overseas “gigafactory” for battery cell manufacturing in Ontario, Vic Fedeli reflected on the work, the meetings and the sleepless nights that went into the province ultimately securing the planned Volkswagen plant in St. Thomas, Ont., where production is planned to start in 2027.

That day in Germany, as Volkswagen officials rattled off a list of conditions to build in Ontario, including skilled labour, a reliable and clean energy supply and an “ecosystem” of other auto-related businesses, Fedeli thought of a 1,500-acre parcel of land in southwestern Ontario that the province was eyeing for the company.

“We had a pretty good feeling that day that we’ve got a genuine shot at this because we’d already been assembling our megasite in St. Thomas,” he said in an interview.

“So we knew we were going to make a lot of these checkmarks. Three weeks later, they were here in Canada, here in Ontario, meeting with us.”

Volkswagen officials toured the site that is now set to be their facility’s home, and over the next three months travelled to Ontario four more times to meet with Premier Doug Ford.

“You want a deal closed, you bring in the big guy,” Fedeli said.

“He said to them, ‘We want you to make money. We need you to know that we’ve lowered the cost of doing business.'”

Ford listed measures such as implementing corporate tax relief and lowering Workplace Safety and Insurance Board premiums, responding to pleas from other automakers to lower the cost of business, Fedeli said.

“We’ve done everything that the auto sector has asked (of) us,” Fedeli said.

Several weeks ago, the province submitted the last of its materials to the automaker ahead of a Volkswagen board meeting Monday morning where the final decision was made, Fedeli said. There had been a lot of sleepless nights in the interim awaiting the decision, he said.

“We’re obviously very excited,” Fedeli said. “We’re obviously working on the next deals already.”

Since 2020, Canada and Ontario have attracted more than $17 billion in investments in the quickly growing field.

This will be the second electric vehicle battery factory in Ontario. Last year, automaker Stellantis and South Korean battery-maker LG Energy solution announced they were building a facility in Windsor, Ont., with a $5-billion price tag.

Numbers such as the money being invested and jobs being created at the Volkswagen facility will be disclosed at a future announcement with the automaker’s representatives, Fedeli said.

The company said Canada offers ideal conditions, including a local supply of raw materials and wide access to clean electricity.

“Canada and Ontario are perfect partners for scaling up our battery business and green economy jobs, as we share the same values of sustainability, responsibility and co-operation,” Thomas Schmall, chairman of the supervisory board of PowerCo SE, Volkswagen’s battery company, wrote in a statement.

“We are committed to be a reliable partner and good neighbor for the people in St. Thomas and Ontario.”

Fedeli and federal Industry Minister Francois-Philippe Champagne wrote in a joint statement that the announcement is a “major vote of confidence” in Canada and Ontario being global leaders in the EV supply chain.

“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,” they wrote.

The company signed an agreement last year with the federal government to work to identify suitable sites for such a facility in Canada, and they had also committed to investigate ways for Canada to contribute to Volkswagen’s battery supply chains, including raw materials and assembly.

Ontario set the stage last month for the Volkswagen announcement, introducing and quickly passing a law adjusting the municipal boundaries for a 1,500-acre “mega site” in southwestern Ontario.

Fedeli said at the time that the site straddled St. Thomas and Central Elgin, and putting the entire piece of land within St. Thomas would eliminate the red tape and barriers that could come with future companies having to deal with two municipalities.

Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, credited Monday’s announcement to hard work by both levels of government.

“Canada now boasts major investments in electric vehicle manufacturing from six of the world’s top seven automakers,” he said in an interview.

“For a country without its own domestic brands, it is unprecedented and speaks to the globally competitive value proposition of investing billions here.”

This report by The Canadian Press was first published March 13, 2023. 

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