Canada is luring Volkswagen for the planned battery cell plant with billions in subsidies.
The deal has another decisive advantage for the Wolfsburg carmaker.
St. Thomas/Wolfsburg - With Ontario in Canada, VW announced another location for the construction of a gigafactory in March.
A huge battery cell plant is being built there by the Volkswagen subsidiary PowerCo, as a cornerstone in terms of raw material extraction and development for the Group's electrical strategy in the North American market.
The German carmaker can apparently look forward to massive financial support from Canada.
Because the second largest country in the world in terms of area (after Russia) has promised VW billions of dollars for the subsidy.
These have a volume of between 8 and 13 billion euros over a period of ten years, writes WirtschaftsWoche
.
VW negotiates a mega deal with Canada - and receives billions in subsidies
The contract was negotiated between those responsible for the Wolfsburg car group and Canada's Industry Minister François-Philippe Champagne.
According to the report, the annual payments include production support and an investment subsidy.
As the report explains, the amount is based on the amount that Volkswagen would have received if the corresponding factory were built under the Inflation Reduction Act (IRA) in the USA.
The exact sum depends on the scope of production and the development of subsidies in Canada: the latter depends on the United States, the portal explains.
The driver of the agreement between Canada and Volkswagen is reportedly the government of Prime Minister Justin Trudeau.
The subsidies are considered necessary to make Canada fit for the future for the automotive sector and not just reduce the country to the status of a raw material supplier.
Expertise in advanced, clean technologies should boost the local economy and industry and create jobs.
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VW electric bus at a car show: The largest gigafactory outside of Europe is being built in Canada (symbol image).
© IMAGO / Eibner
It's about the "opportunities for a new generation," Champagne told
Bloomberg
.
Thousands of jobs are planned for the new plant in the 40,000-inhabitant town of St. Thomas in southwestern Ontario.
Volkswagen is investing massively in North America - Gigafactory is also being built in Spain
The agreement is apparently also based on a visit by Federal Chancellor Olaf Scholz to Canada in August 2022, when he spoke to government politicians like Trudeau about joint projects and promised investments by German car manufacturers.
"With the decision to go for battery cell production in Canada and the Scout project in South Carolina, we are rapidly expanding our North America strategy," says Volkswagen CEO Oliver Blume in a statement.
These are the ten most-built electric cars in Europe
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The PowerCo division bundles global battery activities at Volkswagen.
Because the largest car manufacturer in Europe is planning massive investments and increasing its capacities in order to remain at the forefront when it comes to electromobility.
In addition to Salzgitter and Ontario, a battery cell factory will also be built in Valencia, Spain, which is scheduled to go into operation in 2026.
Last year there was an order worth billions for Deutsche Bahn, from the Canadian city of Toronto and the province of Ontario.
(PF)
List of rubrics: © IMAGO / Eibner