Canada will be providing Volkswagen with an investment to fund its North American battery plant in the country, which will be the first plant outside Europe. This will be located in the Southwestern Ontario City of St. Thomas.
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Volkswagen's new ID 2 electric car model is presented at the Congress Center in Hamburg on March 15, 2023.
Funding VW Battery Plant
Volkswagen will be receiving up to C$13 Billion or $9.7 Billion in subsidies, with a C$700 Million grant to fund the first upcoming battery plant of the company in North America. According to Reuters' report, this investment will match what Volkswagen would have gotten from the United States Inflation Reduction Act.
Industry Minister Francois-Philippe Champagne said that this is a good investment as once the production begins and started selling batteries, Canada's production support will come into play in the upcoming years.
The funding would be disbursed over a decade, which also includes funds from the Ontario government. Champagne added, "The payback is five years. Talk to any banker, he would say if you get your money in five years, for a plan that's going to be there for 100 years, that's a pretty good deal for Canadians."
Volkswagen declined to comment regarding this information but the company is expected to announce more details of the new battery plant this coming Friday in a meeting with its battery unit PowerCo and Canadian Prime Minister Justin Trudeau in Ontario.
PowerCo as a Global Supplier
(Photo : Sean Gallup/Getty Images)
BERLIN, GERMANY - APRIL 17: Volkswagen presents its new ID.7 electric sedan at an official debut event on April 17, 2023 in Berlin, Germany. German carmaker Volkswagen is expanding its lineup of electric cars as it transitions away from the combustion engine.
In this partnership, Volkswagen is aiming for PowerCo to become a battery supplier around the world, meeting half its own demand with European and North American plants. By 2030, the company targets more than 20 billion euros or $21.94 billion in annual sales.
Last March, CTV News reported that PowerCo Supervisory Board Chairman Thomas Schmall described the partnership between Canada and Ontario as perfect for scaling up the country's battery business and green economy jobs. Especially since they are sharing "the same values of sustainability, responsibility, and cooperation."
Also Read: Volkswagen Reveals Electric Luxury Sedan 'ID.7' With 700-km Battery Range
First Battery Plant Outside Europe
The North American battery plant in Canada will be having a maximum capacity of 90 gigawatt-hours, providing enough batteries for more than a million cars every year. The production is planned to start in 2027 and is expected to employ thousands of employees once the facility becomes fully operational.
The Verge reported that Volkswagen hopes to meet a major requirement by establishing a battery plant in North America, enabling its EVs to be eligible for the US President Joe Biden Administration's Federal Tax Credit of $7,500. VW stated that the St. Thomas plant will equip the Group brand's BEVs in the region, containing cutting-edge battery cells.
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