Canada commits $13B towards Ontario Volkswagen battery plant: reports

The federal government has reportedly agreed to provide approximately $13 billion in subsidies over the next decade, in order to see Volkswagen build its first overseas battery manufacturing plant in southwestern Ontario.

The federal government has reportedly agreed to provide approximately $13 billion in subsidies over the next decade, in order to see Volkswagen build its first overseas battery manufacturing plant in southwestern Ontario.

According to Bloomberg News, which first reported the "unprecedented" contract after speaking to Industry Minister Francois-Philippe Champagne, the plant will cost $7 billion to build.

The Canadian Press has confirmed that the contract Canada has inked will include both an initial capital investment of $700 million and then up to $13 billion in annual production subsidies, comparable to what Volkswagen would receive had it taken its business to the U.S. 

In mid-March, the German automaker said its subsidiary PowerCo had plans to establish an electric vehicle (EV) battery manufacturing "gigafactory" facility in St. Thomas, Ont., south of London.

With production planned to start in 2027, the EV battery plant is expected to employ thousands of workers once fully operational.

"Canada and Ontario are perfect partners for scaling up our battery business and green economy jobs, as we share the same values of sustainability, responsibility and cooperation," said chairman of PowerCo's supervisory board, in the March statement detailing the deal.

At the time and until now, the federal and provincial governments have remained tight-lipped about how much governments agreed to spend to secure the plant. Ontario has yet to release how much it plans to contribute to towards this plant, or what form provincial funding may take. Any provincial contributions would be on top of what Ottawa has put on the table.