Canada and Volkswagen unveil plans for $15bn gigafactory | Business and Economic News
Canada wants to attract EV supply chain producers so its manufacturing sector can transition to a low carbon economy.
Canada and Volkswagen on Friday outlined funding of more than 20 billion Canadian dollars ($14.8bn) for a battery gigafactory in St Thomas, Ontario, the country’s largest single investment yet in the electric vehicle supply chain.
Europe’s largest carmaker is investing up to 7 billion Canadian dollars ($5.1bn) to build the plant, which is targeting 90 gigawatt-hours of capacity, a statement said.
The federal government will provide up to 13.2 billion Canadian dollars ($9.7bn) in manufacturing tax credits through 2032, matching the $35 per kWh in production subsidies offered by the United States Inflation Reduction Act (IRA), another statement said.
Ontario’s provincial government has also pledged to provide 500 million Canadian dollars ($371m) in direct investment to the German carmaker as well as hundreds of millions of dollars to upgrade 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 over the coming decades,” Prime Minister Justin Trudeau told reporters in St. Thomas.
“It will take millions upon millions of batteries to power the Canadian auto industry… and the economic impact of this project will equal the value of the government’s investment in less than five years,” Trudeau said.
The decision to build the plant in Ontario was announced last month. New construction is scheduled for 2024 and production is expected to begin by 2027, VW said.
Attracting a VW plant to Canada has been a priority for Industry Minister Francois-Philippe Champagne, who wants to attract EV supply chain producers so the country’s manufacturing sector can live at the heart of a low-carbon economy .
The plant will be based in St Thomas, which is about 195km (120 miles) north-east of the city of Detroit, Michigan in the US.
It will be Canada’s largest factory when completed, Trudeau said, and will provide most of the battery capacity needed by VW in North America.
VW joins Stellantis NV and LG Energy Solutions joint venture in building battery gigafactory in Canada, as European carmakers seek to take advantage of US climate law 50 percent of EV battery components must be made in North America for vehicles to qualify for generous consumers. tax credits.