Volkswagen Group and PowerCo, its battery company, have chosen Canada for its first overseas battery cell factory.

Located in St. Thomas, Ontario, the plant will produce battery cells starting in 2027, Volkswagen Group said. 

The company launched PowerCo this past summer. Now PowerCo will be in charge of the global battery business. Volkswagen Group said in a press release that Canada offers ideal conditions, with local supply of raw materials and wide access to clean electricity. 

The factory in Canada is one of six that Volkswagen Group plans to build. This is all part of a broader global plan to cut battery costs in half. The company added that this move is “part of a larger plan that Volkswagen and PowerCo agreed upon with Canadian Prime Minister Justin Trudeau’s government in August last year.”

The other factories will be located in Europe, and construction has already started at locations in Salzgitter, Germany, and Valencia, Spain. The Canadian location is the third factory, and the first in North America.

The company is calling this recent move in North America proof of its “ambitious growth strategy” on the continent. 

“Our North American strategy is a key priority in our 10-point-plan that we’ve laid out last year. 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,” said Oliver Blume, chief executive officer of Volkswagen Group.

More details on gigafactory St. Thomas will be revealed in the near future, the company says. 

François-Philippe Champagne, Canada’s minister of Innovation, Science and Industry, called this announcement a “true testament” to Canada’s skilled workforce and growing battery ecosystem. 

“VW’s decision to establish its first overseas gigafactory in Canada speaks to our country’s competitiveness when it comes to attracting major investments. It is also a vote of confidence in Canada as the green supplier of choice to the world. With Volkswagen and PowerCo, our government looks forward to working together towards a cleaner, more sustainable and resilient economy,” he said.

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