VW completes Ontario gigafactory site preparation

The Powerco subsidiary of German legacy manufacturer Volkswagen has finished the first phase of its 90GWh battery gigafactory in St Thomas, Ontario, its first plant outside Germany. Then project is now ready to break ground in 2024.

“We are fully on track [and] we are now ready for the next stage on our path to the sustainable and responsible production of battery cells,” says Powerco COO Sebastian Wolf. The firm is now in the process of setting up a local office in downtown St Thomas, continuing local hiring and signing its first service agreements with local providers, ahead of construction start in the new year.

The St Thomas facility will equip VW BEVs with what it calls “cutting-edge unified cells, a new technology designed for cost-efficient scale production”. The cells produced in St Thomas, which has a planned start date of 2027, will go into EVs sold in the North American market.

Annual production capacity will be up to 90GWh in the final expansion phase. The planned investment totals up to €4.8bn or C$7bn ($5.1bn) by 2030, VW says.

The gigafactory forms part of a wider plan from VW to invest in and localise all portions of the supply chain. The firm has so far this year been putting in place battery metals sourcing agreements in locations as divese as Indonesia and Brazil.

VW also has an agreement in place with Chinese battery firm Gotion, which is developing long-range LMFP batteries in conjunction with conventional LFP cells. However, after the US Treasury last week adopted strict rules of origin around so-called ‘foreign entities of concern’, the viability of any North American battery collaboration with a Chinese firm is more uncertain.

Canada attractions

Ontario has emerged in recent years as a prime location for both upstream and downstream projects in the battery supply chain — with its access to raw material reserves and being home to Canada’s automotive technology cluster, as well as lying close to automotive manufacturing hubs across the US border in Michigan.

Canada markets itself has being the only western economy boasting reserves of all battery raw materials. It also boasts of trade agreements with the US and Mexico, with Europe, and with Asia. And its national and federal politicians are all relatively well-aligned in supporting new clean-tech investment.

Add in growing amounts of green electricity, a well-educated workforce, an admirably stable banking system and a not immaterial domestic car market (with the added bonus of significant buyer diversity due to Canada's relatively large urban immigrant populations) and it is clear to see why Canada is gaining traction in the e-mobility space — even if it cannot boast cheap labour as a route to getting EV production costs down.

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Several large-scale battery projects have been attracted to Canada, including those of Belgium’s Umicore and Sweden’s Northvolt. The latter plans an 85GWh/yr gigafactory, as well as cathode active material (CAM) production and battery recycling facilities close to Montreal, QC, while the former is developing a 35GWh/yr equivalent CAM and precursor CAM plant in Loyalist, ON.

Political cooperation 

The St Thomas gigafactory “will represent a significant milestone in the end-to-end auto and EV battery supply chain growing across the province”, says Vic Fedeli, Ontario’s minister of economic development. “I am excited that Volkswagen has selected St Thomas to be a key part of the plan for North America as a hub for building the cars of the future,” agrees the city’s mayor Joe Preston, labelling it “a game changer for Ontario’s EV vision”.

VW is now targeting an ambitious growth plan in North America, including “a broad portfolio of full-electric vehicles in the US and Canada by 2030, the expansion of Electrify America’s coast-to-coast charging network in the U.S. and Canada, as well as the announcement of the return of the iconic Scout brand to deliver its first all-electric vehicles in 2026”.

But some analysts have criticised the firm’s decision to try to revive a dormant brand to crack the electric segments of US pickup and SUV markets in which it has previously struggled, rather than taking the potential shortcut that the acquisition of a US EV pure play such as Rivian could offer it.