The automaker has already signed an agreement with the federal government.
Other sites in North America are still being considered.
This will be VW’s first battery factory outside of Europe.
Ontario is still on the shortlist in Volkswagen’s search for a place where to build its first battery factory outside of Europe.
Back in December, the automaker signed a non-binding agreement with the Canadian federal government acknowledging that the country is being considered for its next project.
Since then, Ontario has offered incentives to make sure VW decides to implant its factory in the province, an outcome that seems more and more likely.
Indeed, the automaker has already announced a Memorandum of Understanding with Umicore, a Belgian company that specializes in cathode and precursor battery materials, which represent about 50% of the value of a completed battery pack.
This company has already independently committed to opening a new factory to process battery components in Kingston, Ontario, at the cost of CA$ 1.5 billion.
Since Volkswagen wants Umicore to supply its new North American factory with enough cathode for 550,000 electric vehicles, it would make sense for it to build the new battery plant in or around Kingston.
Despite all of this, other locations in North America are reportedly still on the table since VW is currently evaluating a variety of possible outcomes to determine the areas that offer the best potential labour pool, local incentives, and raw material supplies.
The goal of this new project is to make sure electric Volkswagen vehicles qualify for federal tax incentives in the United States under the new criteria that have been added as part of the inflation reduction act late last year.
As of now, the 2023 Volkswagen ID.4 is still eligible for the credit since it is manufactured in Tennessee and its batteries are assembled in Georgia by LG and Samsung.
As VW adds new models to its Chattanooga production line, however, its suppliers might not be able to keep up with the increased demand for batteries without having to import materials from other continents, which would jeopardize the eligibility of its EVs.
Thus, having its own North American facility to produce batteries will allow it to have greater control over its production process.
Source: Carscoops
