Construction of PowerCo SE’s battery cell gigafactory in St. Thomas, Ont. will start in 2024, laying the groundwork for its first overseas electric vehicle (EV) battery plant and its largest to date.

"We are fully on track. Site preparation, the first phase of Gigafactory St. Thomas, has been completed,” Sebastian Wolf, COO of PowerCo, said in a release.

The St. Thomas factory is expected to have an annual production capacity up to 90 gigawatt-hours in the final expansion phase (enough for approximately one million EVs), and take in $20 billion in investment from Volkswagen and the Canadian and Ontario governments.

Up to 3,000 direct jobs are projected to be created at the factory, which is to be powered by carbon dioxide-free electricity.

Owned by Volkswagen Group and headquartered in Germany, PowerCo announced it will launch a Canadian subsidiary named PowerCo Canada Inc., also in St. Thomas, to direct operations in North America.

Choosing Ontario for the gigafactory

The EV battery cell factory is being built on 150 acres of land, with an industrial and supplier park measuring at 1,500 acres.

In December 2022, PowerCo decided on St. Thomas for its first North American battery cell factory because of its local supply of raw materials and access to clean electricity.

Its location south of London puts it at the heart of the Great Lakes Automotive Corridor and near major cities such as Toronto and Detroit, giving it access to regional talent and labour.

PowerCo Canada’s next steps are setting up a local office in downtown St. Thomas, hiring staff and signing servicing agreements with local providers such as Hydro One, WSP and Turner & Townsend for electricity transmission, general design and project management consulting, respectively.

Environmental assessments are under way and the design for the expansion of local highway and road infrastructure is on track, PowerCo said.

The gigafactory is part of Volkswagen’s EV plans for North America. The goals include introducing a portfolio of EVs in Canada and the U.S. by 2030, expanding Electrify America's charging network in the two countries and reintroducing the Scout as an EV in 2026.

The battery cells for most of Volkswagen’s 25 new EV models that will be introduced by 2030 will be sourced from the gigafactory.

Canadian battery factory investments

Canada has been investing heavily into battery factories as part of the transition to a clean energy economy.

A huge NextStar EV battery facility to be constructed in Windsor could be worth up to $15 billion in tax breaks to its partners, Stellantis and LG Energy Solutions.

Umicore’s battery parts factory in Loyalist Township in eastern Ontario is receiving almost $1 billion in incentives from the federal and provincial governments.

Becancour, Que. has been a nexus of battery EV investments, ranging from players such as Ford and South Korean battery companies, GM and POSCO Future M Co., and Volta Energy Solutions’ battery copper foil plant.