The Volkswagen emblem is seen on a vehicle for sale at a dealership in Ottawa, on Thursday, April 20, 2023. The massive new Volkswagen battery plant in southwestern Ontario will create 3,000 direct jobs and 30,000 indirect jobs to the area.THE CANADIAN PRESS/Justin Tang
ST. THOMAS, Ont. – A massive new Volkswagen electric-vehicle battery plant in southwestern Ontario will create up to 3,000 direct jobs and 30,000 indirect jobs in the region.
Prime Minister Justin Trudeau, Ontario Premier Doug Ford and top brass from the German automaker are unveiling details of the new Volkswagen “gigafactory” that will be built in St. Thomas, Ont.
Volkswagen, the world’s largest automaker, will invest $7 billion in the electric-vehicle battery plant, which will be operated by its company, PowerCo.
“We’ve landed the largest auto investment in the province’s history,” said Ontario Economic Development Minister Vic Fedeli.
“It’s not only a big win for the people of St. Thomas, but it’s huge for Ontario.”
Volkswagen’s contract with Canada will include an upfront capital investment of $700 million and production subsidies for every battery the company makes and sells, amounting up to $13 billion over a decade.
Ontario will invest $500 million in direct incentives to the company and spend hundreds of millions more to build roads, utilities, police stations and fire stations in the area, Fedeli said.
The plant will be built on a 1,500-acre “megasite” with construction set to begin in 2024, and production expected to begin by 2027.
The plant is expected to produce enough batteries for up to one million electric vehicles per year, the province said.
The sprawling plant will anchor an industrial park where several other manufacturers will be needed to supply critical components for the batteries, Fedeli said.
Ottawa and Ontario began wooing the German automaker a year ago when the Volkswagen board came to Toronto, Fedeli said.
Federal Industry Minister François-Philippe Champagne and Fedeli formally pitched the company in Germany last fall, which became a turning point in the deal.
“We really felt that when we flew back from that meeting with Volkswagen, we were very confident then that Ontario was the right place for them, but we had to put the right package together,” Fedeli said.
PowerCo chairman Thomas Schmall told reporters a month ago that the company looked at 200 different parameters in making its site selection.
The United States had an edge on proximity to vehicle manufacturing because Canada has no Volkswagen plant. But Canada had the edge on raw materials – namely the minerals and metals needed for the batteries – as well as an abundance of clean power.
Fedeli said the pitch included two “line items that were missing” from every other country’s pitch to Volkswagen: universal health care and the loonie.
“We showed the value of the Canadian dollar and the value of universal health care and what that means in savings,” 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 announced they were building a facility in Windsor, Ont., with a $5-billion price tag.
This report by The Canadian Press was first published April 21, 2023.
