Trudeau unveils VW electric-vehicle battery plant plans, defends $13B subsidy

ST. THOMAS – A massive new EV battery manufacturing plant landing here will create 30,000 jobs in Southwestern Ontario and the nation, automotive and political officials said at the announcement Friday about the Volkswagen production facility.

PowerCo, Volkswagen’s battery-making subsidiary, said at a media event the automaker will open a $7-billion, 1.1 million-square-metre (12 million square foot) plant on about 160 hectares (400 acres) in 2027 that will make one million batteries a year.

The plant will employ about 3,000 workers and is expected to create about 30,000 spinoff positions, including 7,000 in direct supplier positions, said Francois-Philippe Champagne, the federal minister of industry, science and innovation, at a morning news conference at the St. Thomas Railway Museum.

“The people of St. Thomas have been let down. They have lost thousands of jobs, and we are investing in workers, investing in manufacturing, investing in people here,” he said.

“This will be the largest manufacturing plant in Canada. Would Canadians be happy to see this go south of the border? I don’t think so.”

VW is the first European automaker to open a plant in Canada and the first to build an auto plant in the country since Toyota opened an assembly plant in Woodstock in 2008. It is also VW’s first EV plant in North America.

When constructed the plant will be made up of several buildings on about 160 hectares in St. Thomas and there will be several buildings on site totaling more than 1.1-million square meters, said Sean Dyke, chief executive of the St. Thomas economic development office .

“It is amazing. This community has come full circle,” from losing more than 5,000 jobs in plant closings more than 10 years ago, he said.

“This takes us to an unbelievable level,” Dyke said.

St. Thomas Mayor Joe Preston agreed, adding, “the future is bright. What a day, what a month, what a place to be,” he said.

“St Thomas is on a roll.”

The federal government will provide Volkswagen with up to $13 billion in production subsidies for the electric-vehicle battery plant, by far the most generous subsidy the Canadian government ever has provided to an automaker for locating a factory here.

Officials with the German automaker joined Prime Minister Justin Trudeau and Premier Doug Ford here Friday morning to officially announce the details of the manufacturing plant and Trudeau addressed commentary over the size of the subsidy.

“Let’s be really clear about what’s happening here today,” the prime minister said. “Our neighbors to the south were willing to put up an awful lot of money” to locate VW there.

“Everyone wanted this.”

The investment will mean $200 billion to the Canadian economy during the coming decade, Trudeau said.

The federal funding matches the Volkswagen subsidy would have received through the inflation reduction act (IRA) in the US had it decided to build the factory south of the border, officials said.

“The IRA in the US is hundreds of billions of dollars. We cannot go toe-to-toe with that, but we can be strategic,” Trudeau said.

“There is a global competition for best investment and jobs for the future. . . We need to make things here, in our country.”

VW also received $700 million from Ottawa to help build the plant and $500 million from the Ontario government.

The subsidies will be paid during 10 years only when the automaker begins production and ships batteries. The subsidies will end if the IRA in the US is rescinded, Champagne said.

The federal government’s investments, he noted, will pay off in about five years through economic benefits to the economy.

“This is a great investment for Canada because the economic impact will equal our investment in five years,” he said. “This is a good deal. We made the decision to invest in workers, invest in manufacturing.”

Trudeau agreed with Champagne on the subsidies paying off. “The future will be strong and bright for people in St. Thomas and across the country. This is the place to build the future together.”

The St. Thomas plant will be able to supply batteries for one million vehicles a year, and the plant will be one of VW’s largest, said Frank Blome, chief executive of PowerCo.

The plant will have six production lines and of the 25 electric vehicle models VW will make in the coming decades, many batteries powering them will come from St. Thomas, he said.

Volkswagen chose St. Thomas because of its proximity to mineral supplies found in northern Ontario, clean energy supply, its workforce and the region’s track record in manufacturing, said Kapil Lakhotia, chief executive of the London Economic Development Corp.

“This historic regional investment has brought our communities, post-secondary institutions, and newcomer talent together to ensure we have the workforce we need to fill thousands of jobs,” he said. “The electrification of the auto industry is creating opportunity, innovation, spinoff and supply-chain jobs.”

It is believed the St. Thomas plant will supply three VW plants making electric vehicles, one in Tennessee, another under construction in South Carolina and an Audi plant yet to be announced.

VW’s 160-hectare site will be located on 600 hectares of industrial land assembled by St. Thomas, the balance of which will be used as an industrial park, including for suppliers to VW, as well as services such as electric sub-stations, roads and a rail line, Dyke said.

The site in east St. Thomas is bounded by Highbury Avenue, Ron McNeil Line, Yarmouth Center Road, and the rail line just north of Talbot Street. Site clearing already has begun and buildings on the site will be demolished.

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