The EV battery manufacturing factory in St. Thomas is expected to break ground next year with a target to commence production in 2027

Volkswagen and PowerCo SE will build their largest cell factory

Volkswagen will build the PowerCo gigafactory in St. Thomas, Ontario. (Credit: Volkswagen)

Volkswagen Group said that it will invest up to C$7bn (€4.8bn) through its battery company PowerCo to build the previously announced gigafactory in Ontario, Canada.

The investment to be made until the end of this decade, will enable the electric vehicle (EV) battery manufacturing plant to reach an annual production capacity of up to 90GWh in the final expansion state.

It can potentially generate up to 3,000 jobs at the gigafactory in St. Thomas, while opening up tens of thousands more indirect roles in the region.

The factory is expected to break ground next year with a target to begin production in 2027.

Volkswagen’s announcement was made in the presence of Canadian Prime Minister Justin Trudeau.

Trudeau said: “When we talk about our made-in-Canada plan, we’re talking about creating good, middle-class jobs now and into the future, we’re talking about clean air for our kids and grandkids, and we’re talking about a strong economy that works for all Canadians.

“That’s what Volkswagen’s new electric vehicle battery plant in St. Thomas – the largest manufacturing plant in the country once built – is all about. It’s a win for workers, for the community, and for the economy.”

Last month, the German automobile group announced the selection of St. Thomas as its first gigafactory for EV batteries outside Europe.

The new Canadian facility will manufacture sustainable unified cells that will power Volkswagen’s battery electric vehicles (BEVs) in the North American region.

To support the group’s investment, the Ontario government of Ontario is offering it direct incentives worth C$500m (€335.5m).

Volkswagen Group technology board member Thomas Schmall said: “North America plays a key role in our global battery strategy. The region will become PowerCo SE’s second pillar beside Europe, with battery cells made in North America for North America. Gigafactory St. Thomas opens the door to a key market for e-mobility and battery cell production.

“We aim to make PowerCo a global player in the battery business and to pave the way for clean, sustainable mobility. Gigafactory St. Thomas is an important milestone in our roadmap.”

Last month, Volkswagen Group started construction on the €3bn Gigafactory Valencia, the group’s second PowerCo gigafactory in Valencia, Spain.