Volkswagen EV battery plant to attract $1-billion supply plants and 30,000 jobs

Volkswagen Group’s battery cell plant will occupy roughly 25 per cent of a 1,500-acre (600-hectare) site in St. Thomas, Ont., building what will become Canada’s largest manufacturing facility.

But as the automaker and its in-house battery subsidiary PowerCo ready their shovels for the $7 billion construction project, the process of parceling out the remaining 1,130 acres (457-hectares) to prospective cell plant suppliers, is just getting started.

“When you attract an electric vehicle battery manufacturer, you need a lot of component manufacturers,” Vic Fedeli told Automotive News Canada April 21, pointing to cathode and anode material, copper foil, and lithium hydroxide as several of the key inputs.

Fedeli would not pin a specific value to the expected spending, but said the cell plant’s supplier park will attract several “billion-dollar-plus facilities.”

Sean Dyke, CEO of the St. Thomas Economic Development Corp., said clearing the way for this set of follow-on investors in the city midway between Toronto and Windsor “should keep me employed for a few years.”

'SPACE AVAILABLE' FOR SUPPLIERS

“I know that [Volkswagen and PowerCo] have some potential suppliers that may or may not locate close to the facility. We want to make sure that we have space available for those.”

The municipality will also be focusing on the peripherals, Dyke added, ensuring the roads, railways, and hydro corridors can handle the surge in activity.

Housing, both in St. Thomas and the neighbouring communities, is another local focus.

“Nobody has any issue driving from one community to another in this area of Ontario; there’s no traffic,” Dyke said. “So, we need London to grow. We need Woodstock to grow. We need Chatham to grow. And it’s all going to happen, as long as there’s demand.”

The Ontario and federal governments say the Volkswagen plant will create 3,000 direct jobs, as well as 30,000 indirect jobs, many of which are likely to be concentrated in the supplier park around the cell plant.

PowerCo is in discussions with a range of potential suppliers, according to company CEO Frank Blome. Volkswagen’s dedicated battery unit, he said, aims to create a local supply chain for the St. Thomas plant, which is scheduled to produce its first battery cells in 2027.

One prospective supplier has already committed to putting down roots in Ontario, though not in St. Thomas. Battery materials company Umicore announced plans to build a $1.5 billion cathode active materials plant outside Kingston, Ont., last July.

UMICORE ON BOARD

PowerCo is already working with Umicore in Europe, and Blome said the Belgian-based company’s Ontario plant is a “great option” for cathode material. The two companies signed a non-binding deal to extend their partnership to North America in December, but have not inked a formal agreement.

Suppliers for anode material, aluminum housing and several other key cell components will also be required, Blome said.

Further upstream, Canadian mines are expected to provide at least some of the raw battery materials needed for the cathodes and anodes in PowerCo’s cells. Volkswagen’s initial accord with the Canadian government struck last August was a pledge to collaborate on battery mineral supplies.

Lithium, cobalt, manganese, nickel and graphite will be the key inputs, at least initially. Blome said the Ontario plant will likely build NMC (nickel, manganese, cobalt) lithium ion battery cells, the most common type used in North American EVs today.

“The demand right now probably drives us in that direction,” but the plant will be capable of producing a range of battery chemistries on standardized production lines, he said, allowing the company to shift to alternatives such as LFP (lithium iron phosphate) if buyer preferences change.

1 MILLION BATTERIES ANNUALLY

The PowerCo plant is expected to have six production blocks, and will be capable of producing up to 90 GWh of cells, enough for one million EV batteries per year. Construction in St. Thomas is scheduled to start next year.

By that point, several more links in the PowerCo supply chain may have been coaxed into place.

Fresh off the official cell plant announcement in St. Thomas, Ontario’s industry minister is already making plans to get in front of several of Volkswagen’s prospective suppliers. Fedeli said he will travel to Germany in mid-May with the goal of mapping out more of the supplier park.

Fedeli’s federal counterpart has no immediate plans for a similar European visit, but Laurie Bouchard,  spokeswoman for the ministry of innovation, science and economic development, said François-Philippe Champagne is in close contact with supplier prospects overseas.