Canada wants to attract manufacturers from the electric car supply chain so that the manufacturing sector can transition to a low-carbon economy.
Canada and Volkswagen on Friday announced funding of more than 20 billion Canadian dollars ($14.8 billion) for a battery gigafactory in St. Thomas, Ontario, the country’s largest single investment to date in the electric vehicle supply chain .
Europe’s largest automaker is investing up to 7 billion Canadian dollars ($5.1 billion) to build the plant, which aims to have a capacity of 90 gigawatt hours, a statement said.
The federal government will provide up to 13.2 billion Canadian dollars ($9.7 billion) in manufacturing tax credits through 2032, equivalent to the $35 per kWh of manufacturing subsidies offered by the U.S. Inflation Reduction Act (IRA), according to another statement.
The Ontario provincial government has also pledged to provide 500 million Canadian dollars ($371 million) in direct investment to the German automaker, as well as hundreds of millions of dollars to improve local infrastructure.
The battery plant is expected to be Volkswagen’s largest in the world and will create up to 3,000 direct jobs.
“It will be worth more than 200 billion Canadian dollars to the Canadian economy in the coming decades,” Prime Minister Justin Trudeau told reporters in St. Thomas.
“It will provide millions and millions of batteries to power the Canadian auto industry… and the economic impact of this project will equal the value of government investment in less than five years,” Trudeau said.
The decision to build the Ontario plant was announced last month. Groundbreaking is scheduled for 2024 and production is expected to begin in 2027, VW said.
Luring the VW plant to Canada has been a priority for Industry Minister Francois-Philippe Champagne, who wants to attract manufacturers from the electric car supply chain so the country’s manufacturing sector can survive the pivot to a low-carbon economy.
The factory will be located in St. Thomas, approximately 195 km (120 miles) northeast of the US city of Detroit, Michigan.
When completed, it will be the largest plant in Canada, Trudeau said, and will provide most of the battery capacity VW needs in North America.
VW joins a joint venture between Stellantis NV and LG Energy Solutions to build a battery gigafactory in Canada. tax credits.