Supply Chain Matters continues to highlight announcements being made by global auto manufacturers regarding supply network moves to support domestic and regional EV production and supply network needs.
Global automotive maker Volkswagen announced this week its decision to construct a battery production plant in Canada.
This facility, which will represent VW’s first battery production facility outside of Europe, is to be located in the city of St. Thomas, Ontario, upwards of a two hour drive from Detroit. Plans reportedly call for the facility to be operational by 2027.
The global automaker has previously indicated a strategy to establish regionally based EV supply networks to support the major markets of Europe, China, and North America.
Factors that reportedly influenced this automaker were the U.S. Inflation Reduction Act, which fosters consumer incentives to purchase EV vehicles if 50 percent of major battery components are produced in North America. A further consideration was proximity to key raw materials including minerals, lithium, nickel and cobalt which Canada’s mining sectors can provide. In its reporting,
In its reporting of the VW announcement, Reuters pointed out that a year ago, Germany’s chemical giant BASF secured land in Canada for a planned battery materials facility to serve North American based markets.
It is believed that both the US IRA legislation and incentives provided by the government of Canada helped with this decision.
No specific financial details have been disclosed but Canada’s Federal Innovation Minister, Francois-Philippe Champagne indicated to Reuters and Bloomberg that the facility will represent “the largest single investment in the auto sector in the history of Canada.”
Volkswagen CFO Arno Antlitz indicated in a statement in-part: “We now have the unique opportunity to grow profitably in North America and play a key role in driving the transition to electric mobility.”
In March of last year, Stellantis NV and battery partner LG Energy Solutions announced a joint venture to establish a $4 billion battery production facility in Windsor, Ontario. Bloomberg has previously reported that Ford Motor is in talks with South Korean based suppliers to build a battery components facility in Canada.
Additional Thoughts
This VW announcement comes after global EV auto producer Tesla unveiled “Master Plan Part 3” which aims toward becoming the largest automaker by volume by 2030. That equates to the ability to produce and sell 20 million vehicles globally.
In conjunction with disclosing the plan, Tesla announced an investment in a new production facility to be located in Monterrey, Mexico, and that this facility is destined to produce the termed next-generation EV vehicle.
Reportedly, this new facility will involve upwards of a $5 billion initial investment: “for the installation of the largest electric vehicle plant in the world.” Nuevo Leon Governor Samuel Garcia later indicated that this facility would likely include a $5 billion additional investment in a subsequent expansion phase. Reportedly, production at this facility will be targeted to support both the Mexican EV market and for export.
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