Berlin [Germany], March 14 (ANI): Volkswagen chose a site in the Canadian province of Ontario for its first battery plant outside Europe, taking advantage of the country’s rich raw materials and possibly cashing in on US-legislated incentives aimed at encouraging green-tech investments in North America, The Wall Street Journal said.
The location of Volkswagen’s next battery plant has been a recent flashpoint in the competition between the US and Europe to boost investment aimed at transitioning to a low-emission economy, according to WSJ.
Last year, the Biden administration passed environmental, health care and tax legislation — called the Inflation Reduction Act — that included hundreds of billions of dollars in subsidies and incentives aimed at boosting the country’s clean energy industry and encouraging certain investments in North America.
Volkswagen has previously outlined broad plans to build battery factories in both Europe and North America, and is already building plants in Germany and Spain, according to WSJ. Ahead of Monday’s announcement, Thomas Schmall, VW board member in charge of technology and components, had warned European officials that the company would likely push ahead with its planned investments in North America before breaking ground on its next plant in Europe. He blamed what he called the slow pace of European bureaucracy and lack of financial aid to help jump-start new green technologies, the Wall Street Journal said.
The Wolfsburg, Germany-based company has been negotiating for months over building a battery plant in Eastern Europe, but hasn’t made a final decision, WSJ said. The company says it is waiting for the European Commission to firm up its own subsidy program to level the playing field with the US in the wake of President Biden’s IRA.
It isn’t clear how much — if any — assistance Volkswagen is getting from the IRA, or Ottawa, for its new plant in Canada. “Made In America” conditions attached to the IRA subsidies in many cases apply to investment in Canada and Mexico, according to WSJ.
Europe’s biggest carmaker by sales is in the midst of a buildup of battery capacity to power its growing fleet of electric vehicles. WSJ said the carmaker has pledged to make electric cars at least 80 per cent of all new cars sold by the company by 2030.
The company said it chose a site in St. Thomas, Ontario, for the new battery plant and said it would begin production in 2027. The site in Canada provides access to raw materials needed for battery production, Volkswagen said, as well as renewable energy to power the plant and reduce the overall carbon footprint of the company’s batteries and electric vehicles.
Volkswagen has said it is still committed to building new battery plants in Europe to cover battery-capacity needs for EV production on the continent, according to WSJ.