VW picks Canada for first American PowerCo EV battery plant

Volkswagen has chosen a Canadian site for the first EV battery factory of its new PowerCo business unit outside Europe.

Located in St. Thomas, Ontario, the factory is expected to start producing battery cells in 2027, according to a VW press release. It will be the third PowerCo battery plant globally, along with plants in Salzgitter, Germany, and Valencia, Spain.

Volkswagen ID.4 built at Chattanooga

As VW announced last summer, PowerCo will set up and oversee the network of global battery factories aimed to vertically integrate the supply chain for EVs.

VW has been reportedly been considering Canada for months, after the Inflation Reduction Act (IRA) and the North American sourcing requirements for its new Clean Vehicle Credit allow incentives for EVs and core components that are built in Canada or Mexico as much as if they were built in the U.S. The PowerCo facilities are due to make a new cell format headed into EVs built on VW Group’s next-generation Scalable Systems Platform (SSP).

Teaser for Scout Motors electric SUV and pickup truck

The IRA incentive rules have also likely influenced decisions for increased North American EV assembly. VW already builds the ID.4 in Chattanooga, Tennessee, but now also plans to upgrade factories in Puebla and Silao, Mexico, to assemble EVs, and potentially components such as motors, in the second half of the decade.

VW also recently announced a South Carolina plant for its Scout brand, which is unrelated to the VW brand in the U.S. but would likely tap into the same battery resources. Located near the state capital of Columbia, the Scout factory is scheduled to start producing vehicles in 2026, with an annual production capacity of 200,000 vehicles at full volume. The first Scout model will be a $40,000 electric SUV, followed by a somewhat pricier electric pickup. Both models are due to be unveiled in 2024.