Volkswagen plots first North American EV battery cell plant location

Volkswagen has officially selected St. Thomas, Ontario, as the home for its first North American EV battery cell plant Monday, after revealing its rugged electric SUV and pickup line Scout will build EVs in South Carolina. The initiatives are part of the the VW Group’s broader North American EV strategy.

Shortly after the Inflation Reduction Act was passed in the US last August, VW was among several global automakers looking to build and assemble EVs in the US to take advantage of the new tax credits.

Volkswagen joined fellow German automaker Mercedes-Benz in signing a memorandum of understanding (MOU) to secure vital resources such as lithium, nickel, and cobalt for EV battery cells in the raw-material-rich nation.

The company said it would begin accelerating manufacturing through its PowerCo business in the US with “reliable and sustainable supply chains.” VW established PowerCo, a 100% owned subsidiary, in July 2022 to handle the automaker’s battery operations. PowerCo, through VW, plans to open six EV battery cell plants with 240 GWh combined capacity by 2030.

The first PowerCo battery cell plant will be in Salzgitter, Germany, with production planned for 2025, while the second is planned for Valencia, Spain. Although a third gigafactory was initially expected in Europe, Volkswagen recently shifted its plans, prioritizing a North American plant to take advantage of incentives from the IRA bill.

VW selects Canada for its new EV battery cell plant

According to VW’s press release Monday, Ontario offers the ideal conditions for its first PowerCo battery cell plant outside of Europe including abundant raw materials and access to clean energy.

The company says that the factory will equip VW Group EVs with sustainable unified cells and that production is expected to begin in 2027. The selection comes shortly after VW selected South Carolina to build its Scout brand rugged SUV and pickup EVs.

Volkswagen expects to produce over 200,000 Scout vehicles with production slated to begin in 2026 (and we may also see Audi EVs produced at the site). Oliver Blume, CEO of Volkswagen Group, commented on the decision, saying:

With the decisions for cell production in Canada and a Scout site in South Carolina we’re fast-forwarding the execution of our North American strategy.

Blume says North America is a key part of its 10-point strategy unveiled last year to accelerate EV sales and profitability across its lineup. Volkswagen selected North America over Europe for its third EV battery cell plant because it believes it can claim upwards of $10 billion in subsidies and loans through the IRA bill over the lifetime of the plant.

Details of the planned gigafactory are scarce, including production capabilities, but VW says more details on the St Thomas factory will be revealed in the near future.

Volkswagen is planning to introduce over 25 new electric vehicles, including the ID.4, through 2030. The automaker also plans to upgrade several plants in Mexico to assemble EVs and potentially produce EV components like electric motors in the second half of the decade.