Dive Brief:
- Volkswagen is building its first North America-based gigafactory in Ontario, Canada as the automaker looks to capitalize on North America's burgeoning EV battery market, the automaker announced last week.
- Production is slated to begin in 2027, and the plant will be the company's third global battery factory, alongside one in Salzgitter, Germany and another under construction in Valencia, Spain.
- The automaker is pursuing a wide-scale push further into the EV market, announcing plans last week to invest more than $193 billion in “its most attractive profit pools and regions.” More than two-thirds of that investment is earmarked for electrification and digitalization.
Dive Insight:
Volkswagen has had its eyes on Canada for months.
Last August, the company signed an agreement with the country to ramp up raw material sourcing there, giving Canadian suppliers opportunities to act as raw material suppliers, refiners and processors for the company.
And in December, Volkswagen and its battery company PowerCo began a site selection search for the gigafactory, with CEO Oliver Blume calling Canada a "logical option" for the plant.
Volkswagen joins other major automakers in setting up shop in Ontario. GM opened the country's first full-scale EV factory in the region in December, and Ford and the government of Canada are investing a combined $1.8 billion investment to retool its Ontario factory to serve as an EV battery production hub.
The German automaker is investing across the continent, prioritizing North America as a key growth market. The company plans to introduce two new EV vehicle models into the market next year as a way to reach new consumers on the continent, according to its annual report.
On the production side, Volkswagen-backed Scout Motors announced earlier this month plans to build an EV manufacturing plant in South Carolina. In Tennessee, the company kicked off operations at its Chattanooga plant last July.
"In North America, we are at the right place at the right time," Blume said during the company's recent annual investor conference.
The focus on the continent is part of the company's strategy to increase its EV business and global market share. Volkswagen is planning to increase the share of EVs in its product portfolio by 10% this year, with a target to make every fifth vehicle sold electric by 2025, Blume said at the conference.
