VW Group’s battery subsidiary PowerCo has announced its plans to build its largest battery cell factory in Canada, investing up to €4,8 billion in its creation. It’s quite a safe investment as the Canadian government is offering up to €8,8 billion of subsidies in return.

The PowerCo gigafactory in St. Thomas, Ontario, will have a cell production capacity of up to 90 GWh, equating to the battery packs for about 1 million electric vehicles annually. The construction is planned for 2024, with the 150-hectare factory scheduled to open in 2027, creating up to 3 000 jobs.

Subsidy depends on batteries produced

And precisely that last point is why the Canadian government is eager to subsidize VW’s efforts. But, of course, this €8,8 billion (13,2 billion Canadian dollars) subsidy won’t be given to VW just for building the plant. Instead, Canada is emulating the US’s Inflation Reduction Act and offering up to 35 US dollars per kWh produced.

Therefore, the 8,8 billion euro figure is a maximum amount over ten years. Still, it should boost PowerCo’s revenue figures and make it an attractive investment.

PowerCo and its partners are expected to generate annual revenue of over 20 billion euros, with two other battery factories coming in Salzgitter (Germany) and Valencia (Spain).

Stellantis has also decided on Canada for part of its battery production. It has a Battery Lab for developing EV batteries and a cell factory with LG Chem in Windsor, Ontario, about 200 km from VW’s St. Thomas plant.