HomeTechnologyVolkswagen to build EV battery plant in Ontario

Volkswagen to build EV battery plant in Ontario

Volkswagen to build EV battery plant in Ontario

The Ontario government has announced Volkswagen’s first electric vehicle (EV) battery manufacturing plant will be built in St. Thomas, southwestern Ontario, on Talbot Line near Yarmouth Centre Road, close to the city’s airport.

The announcement, released Monday by the office of Vic Fedeli, the province’s minister of economic development and trade, is the first public confirmation of the deal.

The German auto giant said production is set to begin in 2027, calling it its first overseas “gigafactory” for battery cell manufacturing.

“I think that means a very large plant with a very large workforce,” said St Thomas Mayor Joe Preston on Monday. “We’re already clearing the land and getting things ready for as fast as a construction that we can do.”

Preston said the plant will likely result in thousands of jobs, at the plant itself, along the supply chain and during the plant’s construction, which is expected to take two to four years.

“In the long run, it’s maybe more than we can dream. It’s that good for St Thomas.”

Flavio Volpe, head of the Automotive Parts Manufacturers’ Association (APMA), said the new plant could result in “as many as 2,500 direct jobs created and up to 7,500 total jobs including indirect positions.”

He also 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.”

The province recently passed legislation that would allow the City of St. Thomas to annex 607 hectares of farmland from the Municipality of Central Elgin. The aim is to turn the parcel into industrial lands as part of what the province called an investment “mega-site.”

Neighbours were upset by the legislation, which they said was done in secret and without their consultation.

Preston said it’s typical for governments to keep real estate deals confidential until they’re a fait accompli.

“Obviously any negotiation on property or land purchases needs to be done quietly. We certainly don’t put up billboards about it,” he said.

Volkswagen officials met with Premier Doug Ford on Feb 23, according to a provincial news release to seal the deal.

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 said in a statement.

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

Ontario Economic Development Minister Vic Fedeli said Canada has gone from being behind the pack in the electric vehicle manufacturing sector to being one of the top players in the battery supply chain remarkably quickly.

“It is a stunning move, and I think acknowledged by Volkswagen that they felt they would want to be in the middle of this whole electric battery ecosystem that we’ve created in Ontario,” Fedeli said.

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

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

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

Fedeli and federal Industry Minister Francois-Philippe Champagne said 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,” the ministers wrote.

“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.”

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.

Brendan Sweeney is the managing director of the Trillium Netowrk for Advanced Manufacing at Western University in London, Ont.

Sweeney said the new EV battery manufacturing plant “really is a vote of confidence in Ontario as a location for manufacturing and particularly southwestern Ontario, especially given that this is not an incumbent manufacturer making a new investment — this is a manufacturer that is quite new to Canada.”

Sweeney said the announcement means St. Thomas will likely see a large amount of growth in the form of new housing and more suppliers in order to serve the new plant.

He said part of the reason Volkswagen may have chosen the St. Thomas site is because of recent layoffs at the CAMI Assembly plant in Ingersoll and the Brose auto-parts manufacturing plant in London, as well as the recent closure of the Johnson Controls International plant in Tillsonburg.

The article was reported by CP and CBC.