Volkswagen announces new EV battery plant in Ontario, despite performance concerns in Canadian winters

Ontario will be ground zero for a new Volkswagen (VW) automotive manufacturing plant — in St. Thomas, to be exact — creating 5,000 good-paying jobs and outsourcing work to local suppliers from the industry.

Flavio Volpe, president of the Automotive Parts Manufacturing Association, said this might be the start of reviving regional manufacturing.

"The investment by VW helps to bolster the business case for suppliers to locate and invest in the region," he said Tuesday. 

"I expect the new business will create approximately 5,000 new jobs in the supply chain in the region."

PowerCo SE, the battery division of VW, is expected to begin electric vehicle battery production at its newest 1,500-acre "gigafactory" in St. Thomas when it opens in 2027.

VW and municipal officials did not release details on the investment's value or the plant's scale. Still, according to officials with knowledge of the plant, the German automaker's investment will employ 2,000 to 3,000 when it opens.

St. Thomas Mayor Joe Preston said the plant size would be revealed later, but he and the federal Minister of Innovation, Science and Industry described the VW plant as "historic."

"This will be the largest automotive facility in Canada, ever," claimed Preston. "This is about as good as it gets."

The plant will be located on a site bounded by Highbury Avenue, Ron McNeil Line, Yarmouth Centre Road and the railway line north of Talbot Street in east St. Thomas. The land is already being cleared and prepared for construction, including demolishing buildings.

VW chose St. Thomas — over 40 competing sites in the US — because it has a large land parcel ready for building, is close to mineral supplies such as cobalt and lithium in northern Ontario and has a clean energy supply and manufacturing workforce.

Those suppliers will likely be Tier 1, meaning they will supply the assembly plant directly, with Tier 2 suppliers producing parts and goods to larger suppliers that will sell to Volkswagen.

Magna, which has two plants in St. Thomas, may also land work supplying the automaker or some of its suppliers.

"London and St. Thomas are well positioned to secure the bulk of the new capacity. The ability and availability of the local workforce were of particular interest to VW," said Volpe.

"We can confidently say that a battery plant needs components supplied like an assembly plant. They will follow just-in-time principles so that sourcing would bias closer capacity."

The federal government also offered incentives for battery investment.

In August, VW and Mercedes Benz signed a memorandum of agreement, a "battery material co-operation agreement" with Canada for access to lithium, nickel and cobalt, minerals critical for battery production.

"There will be two to three million people coming to Ontario during the next ten years, and we will get our fair share of them," added Preston.

In December, Ottawa pledged to make all new vehicles sold in Canada electric vehicles (EVs) by 2035.

Federal Environment Minister Steven Guilbeault said that meeting that target begins with making 20% of all passenger vehicles sold in Canada electric by 2026.

Passenger vehicles account for half of all road transportation emissions and about 10% of Canada's total emissions across all sectors.

The Government of Canada is pushing for six million more zero-emission passenger vehicles by 2030. Before the COVID pandemic, annual sales in Canada of cars and light trucks were under two million units, with the total stock of such vehicles in Canada being about 23 million.

However, a recent study uncovered that they could lose up to 30% of their range in freezing temperatures, possibly jeopardizing that target.

According to Seattle-based Recurrent, which measured range loss in 7,000 EVs at temperatures between -7°C and -1°C, the Volkswagen ID.4 lost 30% at those temperatures.

Recurrent researcher Liz Najmam cited the energy needed to heat the EV's cabin during the winter for its decreased range.

She said its higher efficiency relative to gas vehicles prevents it from using wasted heat to warm up the cabin and maintain passenger comfort. 

When you turn a gas vehicle on, you funnel all its heat from the engine to the cabin, whereas EVs generate heat in other ways. Because EVs use more energy to heat the vehicle, there's less juice from the battery to go toward the range.

Brian Kingston, president and CEO of the Canadian Vehicle Manufacturers' Association, cautioned that Ottawa should build the necessary infrastructure for electric vehicles before regulating sales.

He said Canada's infrastructure is not on track to support a growing fleet — and those driving the new cars. 

"The vehicles are coming, but we need a supercharged effort to help marketers make that purchase and make it easy, convenient, and accessible."

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