A massive new electric vehicle battery plant in St. Thomas, Ont., is being hailed as a "game changer" for Canada's auto sector and broader economy, as countries fight to secure investment in clean technologies.
Details of the multibillion-dollar project were announced on Friday at an official welcoming for German automaker Volkswagen to Canada to build what they say could be the largest EV battery plant in the world.
The plant in the southwestern Ontario city is expected to employ up to 3,000 people and create thousands of spinoff jobs. Volkswagen is investing $7 billion to build the plant, according to the Prime Minister's Office.
The plant will be VW's largest in North America and has the potential to be the largest VW plant in the world, said Frank Blome, the CEO of PowerCo, the Volkswagen subsidiary that makes batteries for electric vehicles.
"St. Thomas was the capital for trains and Volkswagen is the capital for automotive, so we fit well together," Blome said on Friday. "Congratulations on outperforming the competition and bringing this factory to St. Thomas."
The plant will have six production lines and make enough batteries for one million cars every year. VW has plans to make 25 new electric vehicle models in the coming decades, and most of their batteries will come from St. Thomas, Blome said.
Prime Minister Justin Trudeau credited Canadian workers for the largest auto deal in the country's history and one of the largest industrial parks in all of North America.
Ontario Premier Doug Ford says politics took a back seat in order for federal and provincial officials to land the investment from Volkswagen. (Kate Dubinski/CBC) "This deal is about workers. It will be worth $200 billion to the Canadian economy over the coming decade," Trudeau said. He acknowledged that Conservative Leader Pierre Poilievre has come out against the deal, saying the $13 billion in federal subsidies is too much.
"Cleaner environment, a stronger, healthier happier workforce, partnerships with Indigenous peoples, that is how we build a strong economy of the future," Trudeau said. "Mr Poilievre has said this is a waste of money.... Canada is about building a stronger future for the middle class and their children."
Trudeau says the project will create up to 30,000 indirect or spinoff jobs.
The federal government agreed to give Volkswagen up to $13 billion in subsidies over the next decade, part of a deal to lure the company to build its first North American electric vehicle battery plant in southern Ontario.
"This is the largest auto investment in the province's history. It's a complete turnaround of the auto sector in three years. We're back. Ontario is back," said Vic Fedeli, the province's minister of economic development, job creation and trade.
'This is the future of our community'
Local business leaders also welcomed the investment. "This plant will dramatically shift the direction of where this community is going," said Sean Dyke, CEO of the St. Thomas Economic Development Corporation.
"This is the future of our community."
On top of the billions from Ottawa, Ontario will pay $500 million in "direct incentives" to VW. The province will also invest new funds in St. Thomas and surrounding communities.
Ontario Premier Doug Ford praised the deal and said it was important to put political differences aside to bring investment to the province.
A licence plate on a yellow VW reads, 'St. Thomas Proud,' at the unveiling of plans to build an EV battery plant in the southwestern Ontario city. (Kate Dubinski/CBC) "The cars of the future will be made here in Ontario from start to finish, from the minerals in northern Ontario to the batteries here in St. Thomas, and they'll be made by Ontario workers," Ford said.
"We are revitalizing Ontario's auto sector and making Ontario the auto powerhouse of North America."
The announcement took place at the Elgin County Railway Museum, with vintage train cars looming over the politicians and executives.
Outside, striking Public Service Alliance of Canada members could be heard chanting as Trudeau praised the workers who will work in the plant.
"Canada has the advantage because of the workers themselves, people who know how to deliver exactly what the world wants," the prime minister said.
WATCH | VW deal a 'game changer' for Canada, says Champagne:
VW deal a 'game changer' for Canada: Champagne
Innovation Minister Franois-Philippe Champagne says the $13-billion deal with the automaker is going to bring more jobs to St. Thomas, Ont., and represents a 'generational opportunity.' "This is more than a gigafactory. It's an understanding that the future is going to be strong and bring for the people here and the people across the country."
The plan is for the federal government to provide annual production subsidies to the German automaker and kick in funds for the massive factory in St. Thomas, which is estimated to be the size of 391 football fields, making it the largest factory in Canada.
'We need to attract industry'
Billions in taxpayer dollars for a profitable automaker like Volkswagen doesn't make sense at first glance, said one international business expert.
But it does once you consider that Canada is up against the United States' Inflation Reduction Act, which offers billions in subsidies to companies to build south of the border, said Andreas Schotter, a professor of international strategy at the Ivey School of Business at Western University in London, Ont., and a former marketing sales controller for North America at Volkswagen.
WATCH |Volkswagen to build EV battery plant in Ontario:
Volkswagen to build EV battery plant in Ontario
Volkswagen has announced it’s building a major electric vehicle battery factory in St. Thomas, Ont. Slated to open in 2027, the factory is the first of its kind in Canada. "That Inflation Reduction Act has really pushed up the need to open the pockets wider for attracting investments in green technology and battery plants. Otherwise, the plant would have been put in the United States or Mexico, but likely the U.S.," he said.
"We need to attract industry," Schotter said.
"Volkswagen is a global player. Attracting this plant here, from a Canadian perspective, makes sense. Price tag? You pay the price and you get them."
Afternoon Drive6:12Agricultural Cost of a Volkswagen EV Plant
As the saying goes, once agricultural land is lost....it's gone forever. This week we learned about 1,500 acres of land in St. Thomas, is slotted for industrial investment. Afternoon Drive Host Allison Devereaux spoke to Crispin Colvin, a Vice President from the Ontario Federation of Agriculture. Bloomberg News first reported the federal subsidy amount. Sources with knowledge of the deal have confirmed the details of the contract with CBC News.
According to details of the deal, federal production support for the plant is expected to range from $8 billion to $13 billion over 10 years. Ottawa is also offering about $700 million in capital expense grants to Volkswagen through its Strategic Innovation Fund.
"This is a game changer for our nation," Innovation Minister Franois-Philippe Champagne said, while fielding questions from reporters on Thursday.