The Volkswagen Group and its battery company PowerCo SE have selected St. Thomas, Ont. as the location for its first overseas electric vehicle (EV) battery gigafactory, with production planned for 2027.

It will be the third plant owned by Volkswagen (VWAGY) worldwide after plants in Salzgitter, Germany and Valencia, Spain. It will be PowerCo’s first overseas cell factory.

“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,” Oliver Blume, Volkswagen’s CEO said in a statement.

Volkswagen and Canada

In August 2022, the German carmakers had signed a memorandum of understanding with the Canadian government to pursue opportunities for the further acquisition of lithium, cobalt and nickel.

In December, the company began its search for a suitable site to establish its first cell factory in North America.

According to a release, Canada offers several "ideal conditions," including “the local supply of raw materials and wide access to clean electricity.”

“Our gigafactory in Canada sends a strong message: PowerCo is on track to become a global battery player. With the expansion to North America, we will enter a key market for e-mobility and battery cell production, driving forward our global battery strategy at full speed,” Thomas Schmall, board member for technology at Volkswagen and chairman of the supervisory board of PowerCo said in a statement.

“Canada and Ontario are perfect partners for scaling up our battery business and green economy jobs, as we share the same values of sustainability, responsibility and cooperation. We are committed to be a reliable partner and good neighbour for the people in St. Thomas and Ontario.“

Volkswagen does not assemble vehicles in Ontario. However, General Motors, Ford, Stellantis, Honda and Toyota do.

A release states more details on the factory will be revealed in the near future. However, according to Reuters, Schmall previously stated in August the company was targeting an initial capacity of 20 gigawatt-hours in the North American plant.

Volkswagen’s electrification

The company had previously stated it plans to build, with partners, six large battery cell factories in Europe by 2030 with a capacity of approximately 240 gigawatt-hours.

Across all of its brands, Volkswagen plans to introduce more than 25 new battery-electric vehicle (BEV) models through 2030.

It has already increased assembly of the all-electric ID.4 compact SUV in Chattanooga, Tenn., and has plans to upgrade the plants in Puebla and Silao, Mexico for the assembly of BEVs and potentially for BEV components such as electric motors in the second half of the decade.

Scout Motors is a separate brand within the group that operates independently. More than 200,000 Scout vehicles are expected to roll off the Columbia, S.C. production line each year. Production at the $2 billion manufacturing plant is scheduled to begin by the end of 2026.

Volkswagen is also the parent company of Electrify America, founded in 2017. It is a coast-to-coast charging network in the U.S. and Canada with 800 stations and 3,500 DC fast chargers powered by 100 per cent renewable energy. The company plans to more than double this number by 2026.

“Electric mobility is our opportunity for growth in the North American region, and we’re pushing ahead with an ambitious strategy to take a leading position. Over the next few years, we will bring many more all-electric models to customers and communities. Strengthening our industrial base and supply chains in North America is key to making this happen,” Pablo Di Si, president and CEO of Volkswagen Group of America Inc. said in a statement.

“PowerCo’s investment in Canada will underpin that strategy by meeting our needs for a stable supply of electric vehicle batteries.”