In a milestone investment, automaker Volkswagen will build a massive new electric vehicle battery plant in St. Thomas.

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Expected to employ more than 2,000, the 185,000-square-metre (two-million-square-foot) plant will be the German automaker’s first North American EV plant, the company announced Monday.

“We are over the moon. We put a lot of work into this, long days and nights for my team. It is huge. We are incredibly excited,” said Sean Dyke, chief executive of the St. Thomas economic development office.

PowerCo SE, the battery division of VW, is expected to begin production of batteries for electric vehicles at its newest “gigafactory,” as it is called, in St. Thomas in 2027.

“It is the ideal investment for this community. VW has been amazing to work with. We are excited to have them here,” Dyke said.

VW did not release details on the value of the investment, but a plant more than twice the size, 420,000 square metres, being built by Stellantis in Windsor is valued at $5 billion.

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Volkwagen reached out to the Ontario government about one year ago and St. Thomas, working with the London Economic Development Corp. (LEDC), made the pitch for the plant and assembled a 600-hectare parcel of land, a portion of which was sold to VW.

A team from VW landed at the London International Airport on several occasions during the last year to tour the site and region, hosted by the LEDC and St. Thomas officials, said Kapil Lakhotia, LEDC’s chief executive.

“This historic investment will have a major economic impact. The LEDC was delighted to play a key role supporting the region,” he said.

VW chose St. Thomas because of its proximity to mineral supplies found in northern Ontario, its workforce and the region’s track record in manufacturing, Lakhotia said.

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“Volkswagen will have significant workforce needs over the coming years and LEDC will continue to work collaboratively with regional partners, post-secondary institutions and training centres to ensure we have the talent and skill needed to support this sizable investment,” he said.

Flavio Volpe, chief executive of the Automotive Parts Manufacturers Association, said Ontario now has investment from six of the top seven automakers in the world in VW, Toyota, Stellantis, GM, Ford and Honda.

“The St. Thomas comeback story is complete,” he said.

Volpe credited both federal and provincial governments with putting political differences aside and working together.

“Driving hard on reducing the cost of business paid off,” he said.

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It is believed the St. Thomas plant will supply three VW plants making electric vehicles, one in Tennessee, another under construction in South Carolina and an Audi plant that has not yet been announced, said Brendan Sweeney, director of the Trillium Network for Advanced Manufacturing.

“This is significant. It means we will have a new manufacturer opening a plant here. When existing businesses here grow, that is great, but when we land a new one, it is even better,” he said.

The new battery plant may lure other manufacturers to locate to feed the VW plant with all it needs, building a Southwestern Ontario supply chain.

“We could see more investment here,” Sweeney said.

London Mayor Josh Morgan also cheered the news, saying London played a key role in landing the investment.

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“There will be significant job creation and I know LEDC worked with St. Thomas as a partner, they played an important role,” he said.

“There will be employment opportunities here. We have a regional approach to economic development. It is exciting.”

St. Thomas suffered through the closing of Ford’s Talbotville assembly plant in 2011 and the Sterling Truck assembly plant in 2009, losing thousands of manufacturing jobs.

“Our gigafactory in Canada sends a strong message: PowerCo is on track to become a global battery player,” Thomas Schmall, board member for Volkswagen and chairperson of the supervisory board of PowerCo, said in a statement.

“With the expansion to North America, we will enter a key market for e-mobility and battery cell production, driving forward our global battery strategy at full speed. Canada and Ontario are perfect partners for scaling up our battery business and green economy jobs.”

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PowerCo operates two battery plants in Europe, in Germany and Spain.

“It’s a game-changer,” said Rob Flack, Progressive Conservative MPP for Elgin-Middlesex-London.

“It is historic. We lost a lot of manufacturing jobs in recent decades and this is a strong signal we are back in business and what is better than to be part of the electrification of Ontario?”

St. Thomas and Southwestern Ontario beat 40 sites in the U.S. for the investment, Flack said.

“We will take critical minerals that we mine and send them to assembly plants here to develop these batteries.”

St. Thomas assembled a 600-hectare parcel of land in the city and in Central Elgin for major manufacturing in the last year. The Ontario government passed legislation allowing for a boundary change so all the land is in St. Thomas.

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The site in east St. Thomas is bounded by Highbury Avenue, Ron McNeil Line, Yarmouth Centre Road, and the rail line just north of Talbot Street, Dyke said.

Site clearing already has begun and buildings on site will be demolished in May, Dyke said.

Volkswagen Group is one of the world’s largest automakers, with US$295.8 billion in revenue in 2022. It manages a portfolio of 10 companies.

“We now have the unique opportunity to grow profitably in North America and play a key role in driving the transition to electric mobility,” VW chief financial officer Arno Antlitz said in a statement.

“Volkswagen has the right strategy, products and scale to take a strong position in the North American market.”

In Windsor, production is expected to begin in 2024 on a joint venture between LG Solutions and automaker Stellantis, on a 420,000-square-metre (4.5-million-square-foot) EV battery plant employing 2,500.

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Since 2020, Canada and Ontario have attracted more than $17 billion in investments by global automakers and suppliers of electric vehicle batteries and battery materials. Canada’s auto sector supports nearly 500,000 workers, and contributes $16 billion annually to Canada’s gross domestic product.

François-Philippe Champagne, federal minister of innovation, science and industry, and Vic Fedeli, Ontario’s minister of economic development, job creation and trade, issued a joint statement on the announcement.

“This historic investment is a testament to Canada’s strong and growing battery ecosystem and Ontario’s competitive business environment. With a highly skilled workforce, clean energy, an abundance of critical minerals, access to markets, and a flourishing automotive and battery sector, we are an attractive investment destination with everything companies need to grow. In addition, Canada and Ontario offer stability and predictability to their business partners,” the statement said.

“We will continue to build on this success by growing our EV ecosystem and supporting clean technology to create well-paying jobs and spur economic growth and prosperity for future generations.”