In a significant move towards expanding its electric vehicle (EV) production capabilities, the Volkswagen Group has chosen St. Thomas, Ontario, in Canada as the location for its first overseas battery cell factory. The plant is expected to begin producing battery cells in 2027, marking a major milestone in VW’s ambitious plans to reduce battery costs by half globally.
Part of Broader Global Strategy
The Canadian facility will be PowerCo’s third factory and the first one outside North America. PowerCo, launched in July 2022, is responsible for managing Volkswagen Group’s global battery business, including sourcing raw materials, cell production, and manufacturing. The company aims to establish a robust battery supply chain to support its EV production plans.
The decision to set up shop in Canada is part of VW Group’s broader strategy to expand its presence in North America. The automaker has already started construction on six factories across Europe as part of its efforts to reduce battery costs and increase production capacity.
Expansion Plans in North America
Volkswagen’s announcement comes amid a wave of expansion plans in the region, including the launch of the U.S.-focused Scout brand. This new brand is designed to cater specifically to American consumers, offering rugged EVs that meet local market demands. The company has also announced its plans to establish offices in Seattle and Silicon Valley as part of its efforts to strengthen its presence in the region.
Scout’s $2 Billion Factory in South Carolina
Earlier this month, VW spinoff Scout revealed plans to build a $2 billion factory in South Carolina, which will be capable of producing 200,000 EVs per year. The facility is expected to begin production by the end of 2026, marking a significant investment in the region.
Ramping Up Assembly and Upgrade Plans
In addition to its expansion plans, Volkswagen has also announced upgrades to its existing assembly plants in Puebla and Silao, Mexico. The company aims to assemble BEVs at these facilities, while also producing BEV components such as electric motors.
The factory in Chattanooga, Tennessee, will continue to assemble the all-electric ID.4 compact SUV, while also serving as a hub for Volkswagen’s EV production plans in North America.
A Strong Signal of Ambition
By choosing Canada as its first overseas battery cell factory location, VW Group has sent a strong signal of its commitment to expanding its presence in the region. The company’s focus on establishing a robust battery supply chain and reducing costs underscores its ambition to become a leading player in the global EV market.
Timeline for Volkswagen’s Expansion Plans
- 2027: Production begins at PowerCo’s battery cell factory in Canada
- 2026: Scout’s $2 billion factory in South Carolina is expected to begin production
- Ongoing: Assembly and upgrade plans continue across existing facilities in North America
The expansion of Volkswagen Group’s presence in North America marks a significant milestone for the company, and its commitment to reducing battery costs by half will undoubtedly have far-reaching implications for the global EV market.