Volkswagen’s New Electric Vehicle Battery Plant Will Create Thousands of New Jobs

April 24, 2023

From mining critical minerals to building batteries and cars, Ontario and Canada continue to attract historic, transformational investments across the electric vehicle supply chain to secure more good-paying jobs for workers today and for decades to come.

Last month, Ontario and Canada secured a historic investment from Volkswagen, Europe’s largest automaker. Volkswagen is investing $7 billion to establish its first overseas electric vehicle battery manufacturing plant in St. Thomas, Ontario. This is the largest electric vehicle-related investment in Canadian history, signaling a strong vote of confidence in Ontario and Canada’s highly-skilled workers, strong economies, and competitive business environments.

Premier Doug Ford and Prime Minister Justin Trudeau were joined by Vic Fedeli, Minister of Economic Development, Job Creation and Trade, and the federal Minister of Innovation, Science and Industry, François-Philippe Champagne, to highlight this generational deal for St. Thomas, Ontario, and Canada’s entire electric vehicle supply chain.

The plant, Volkswagen’s largest to date, will create up to 3,000 direct jobs and up to 30,000 indirect jobs. Once complete in 2027, the plant will produce batteries for up to one million electric vehicles per year, bolstering Canada’s domestic battery manufacturing capacity to meet the demand for electric vehicles now and into the future. The plant, which will generate about $200 billion in value, will be the largest manufacturing plant in Canada. Construction is expected to begin next year.

To strengthen and grow St. Thomas and the surrounding communities, Ontario will invest in other important infrastructure projects across the region, including improvements to roads, highways, utility services, and police and fire services.

Since 2020, historic new investments have been made in Ontario by global automakers and electric vehicle batteries and battery materials suppliers. From mining critical minerals to building batteries and electric vehicles, Ontario and Canada have the resources and skilled workers to continue leading the world. This means a strong economy, good-paying jobs, and clean air now and into the future.

Quick Facts

  • Canada has committed to providing Volkswagen with production support to match the United States Inflation Reduction Act’s (IRA) Advanced Manufacturing Production Credit, equalling USD$35 per kWh. Just like in the U.S., Canada’s support will only be for what is produced and sold and will phase out by 25 percentage points ever year beginning in 2030 (after 2032, the credit would be eliminated). The agreement also has the flexibility to be adjusted should the U.S. Advanced Manufacturing Production Credit change in the U.S.
  • Per battery investment with PowerCo SE ranges between $8 billion and $13.2 billion, depending on production levels. This is a part of an overall electric vehicle battery investment partnership by Canada and Ontario. Projections show that the full economic impact of the project will be equal to the value of government investment in less than five years.
  • To support Volkswagen’s investment, the Government of Ontario is providing $500 million in direct incentives to the company and investing hundreds of millions of dollars more to strengthen and grow St. Thomas and the surrounding communities. This includes infrastructure improvements to roads, railways, water, electricity, and police and fire safety.
  • Canada’s automotive sector supports over 500,000 workers, including nearly 100,000 auto plant workers in Ontario, and contributes $16 billion annually to Canada’s gross domestic product, and is one of the country’s largest export industries.
  • 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.
  • Volkswagen Group is one of the world’s largest automakers with a portfolio of 10 companies.
  • Volkswagen’s new EV battery manufacturing facility will be approximately 370 acres, which is larger than 378 American football fields. The entire industrial and supplier park will be 1,500 acres.
  • In August 2022, the Government of Canada signed a Memorandum of Understanding with Volkswagen to advance cooperation on electric vehicle battery manufacturing in Canada.
  • Since the beginning of 2022, the governments of Ontario and Canada have helped attract other historic investments across the electric vehicle supply chain – from mining to manufacturing – and provided funding to position Ontario and Canada as global leaders in battery manufacturing. This included support to:
    • Retool Honda Canada’s manufacturing operations in Alliston, Ontario, to launch the next generation of hybrid-electric vehicles; and
    • Modernize automaker Stellantis’ assembly plants in Windsor and Brampton, Ontario, to help the company increase production of electric vehicles.
  • Canada’s 2030 Emissions Reduction Plan: Canada’s Next Steps for Clean Air and a Strong Economy is an ambitious and achievable roadmap that outlines a sector-by-sector approach for Canada to reach its climate target of cutting emissions by 40 per cent below 2005 levels by 2030, and to put us on track toward Canada’s goal of achieving net-zero emissions by 2050.
  • Transportation accounts for about a quarter of emissions in Canada. That’s why the Government Canada has an ambitious target of 100 per cent zero-emission vehicle sales by 2035, coupled with a suite of support measures from charging infrastructure to purchase incentives.
  • Phase 2 of Driving Prosperity, Ontario’s 10-year vision for the automotive sector, focuses on transforming the auto sector by building electric, autonomous and connected vehicles and supporting a broader supply chain that includes the exploration, mining and production of critical minerals for the fabrication of electric batteries in Ontario.

Quotes

“This investment, the largest auto investment in our province’s history, is a big win for Ontario, the people of St. Thomas and surrounding areas. We’re thrilled to welcome Volkswagen and PowerCo SE to Ontario and thank them for their tremendous confidence in our province, our workers and our growing electric vehicle supply chain. Welcome to Team Ontario, Volkswagen!”

The Hon. Doug Ford, Premier of Ontario

“When we talk about our made-in-Canada plan, we’re talking about creating good, middle-class jobs now and into the future, we’re talking about clean air for our kids and grandkids, and we’re talking about a strong economy that works for all Canadians. That’s what Volkswagen’s new electric vehicle battery plant in St. Thomas – the largest manufacturing plant in the country once built – is all about. It’s a win for workers, for the community, and for the economy.”

The Rt. Hon. Justin Trudeau, Prime Minister of Canada

“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. Our government continues to create the right conditions for businesses and workers to succeed now and in the future. Thank you, Volkswagen, for choosing Ontario.”

The Hon. Vic Fedeli, Minister of Economic Development, Job Creation and Trade

“Today’s announcement is a true testament to our highly skilled workforce and Canada’s strong and growing battery ecosystem. VW’s decision to establish its first overseas gigafactory in Canada speaks to our country’s competitiveness when it comes to attracting major investments. It is also a vote of confidence in Canada as the green supplier of choice to the world. With Volkswagen and PowerCo SE, our government looks forward to working together toward a cleaner, more sustainable and resilient economy.”

The Hon. François-Philippe Champagne, Federal Minister of Innovation, Science and Industry

“Careers in the auto sector are meaningful, well paying and offer a path to a better life. Today’s announcement is fantastic news for our community and will build a stronger southwestern Ontario for generations to come.”

Monte McNaughton, MPP for Lambton—Kent—Middlesex

“This is a generational investment by Volkswagen and PowerCo SE that will create good-paying and sustainable jobs for St. Thomas, Elgin County, London, and throughout Southwestern Ontario. Economic prosperity is occurring in our region and our government, under the leadership of Premier Ford, is getting it done by creating the right environment for businesses such as Volkswagen and their employees to prosper. Thank you, Volkswagen, and welcome to Elgin County!”

Rob Flack, Member of Provincial Parliament, Elgin—Middlesex—London

“North America plays a key role in our global battery strategy. The region will become PowerCo’s second pillar beside Europe, with battery cells made in North America for North America. Gigafactory St. Thomas opens the door to a key market for e-mobility and battery cell production. We aim to make PowerCo a global player in the battery business and to pave the way for clean, sustainable mobility. Gigafactory St. Thomas is an important milestone in our roadmap.”

Thomas Schmall, Volkswagen Group Board Member for Technology

“We are honoured to partner with Canada, Ontario, and the City of St. Thomas to take the EV industry to a new level. PowerCo was founded in Europe to make a difference in the battery business, offering cutting-edge cell technology and sustainable manufacturing. That includes the creation of up to 3,000 new jobs and great working conditions for our employees in the St. Thomas area. We share the same values and are committed to be a reliable partner for the people in St. Thomas and Ontario.”

Frank Blome, CEO of PowerCo SE

Additional Resources

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Related Article

Canada and Ontario Welcome Historic Investment from Volkswagen

Volkswagen, one of Europe’s largest automaker, announced that its subsidiary PowerCo will establish an electric vehicle (EV) battery manufacturing facility in St. Thomas, Ontario, Canada.

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