By Victoria Waldersee and Jan Schwartz WOLFSBURG (Reuters) -Volkswagen chose Canada to build its first battery cell plant outside Europe, granting its cars access to both Canadian and U.S. subsidies as it works to localise electric vehicle production chain in the region. Volkswagen AG confirmed in December it was looking for sites for a Canadian […]
Volkswagen picks Canada for first battery cell plant outside Europe, Ottawa jubilant
By Victoria Waldersee and Jan Schwartz
WOLFSBURG (Reuters) -Volkswagen chose Canada to build its first battery cell plant outside Europe, granting its cars access to both Canadian and U.S. subsidies as it works to localise electric vehicle production chain in the region.
Volkswagen AG confirmed in December it was looking for sites for a Canadian plant after signing a memorandum of understanding with the country six months prior to secure access to key raw materials for batteries.
Canada, home to a large mining sector for minerals including lithium, nickel, and cobalt, is trying to woo companies involved in all levels of the EV supply chain via a multi-billion dollar green technology fund to safeguard the future of its manufacturing heartland in Ontario – the most populous of the 10 provinces – as the world seeks to cut carbon emissions.
“This is a home run for Canada … when you have a home run like that, you have to celebrate and say, ‘Yes, we won’,” a jubilant Canadian federal Innovation Minister Francois-Philippe Champagne told reporters.
He said Volkswagen would be making “the largest single investment in the auto sector in the history of Canada” but did not give details. The plant will be based in the city of St. Thomas, around 195 km (120 miles) northeast of Detroit.
“I think all the big manufacturers understand that if you need to green the supply chain, Canada is the place to do that,” said Champagne.
Chemicals giant BASF a year ago also secured land in Canada for a planned battery materials facility to better serve electric vehicle markets in the U.S. and Mexico.
It also reflects efforts by European firms to expand their U.S. presence, eager to tap the generous Inflation Reduction Act (IRA) launched last year by President Joe Biden.
Cars with batteries from the planned Volkswagen site, too, will qualify for IRA subsidies, allocated to vehicles with a battery made with a minimum proportion of critical minerals extracted or processed in the United States or a country with a U.S. free-trade agreement, or recycled in North America.
VW’s announcement did not specify the size of the investment or the capacity of the new plant, but board member Thomas Schmall said in August the company was targeting 20 gigawatt hours of capacity at its first North American site.
Volkswagen has long said it is working towards setting up regional supply chains in Europe, North America and China for EV production in light of high transport and logistic costs, supply chain risks and geopolitical tensions.
The IRA gave Volkswagen an incentive to prioritise decisions on North American investments, it said last week, adding plans for battery plants in Europe were still in place but that it would wait to see whether better incentives would be made.
(Reporting by Victoria Waldersee and Jan Schwartz; Additional reporting by Christoph Steitz and David Ljunggren; Editing by Angus MacSwan, Kirsten Donovan and Jonathan Oatis)
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