The federal and Ontario governments are keeping mum — at least for now — about the financial incentives required to land Volkswagen Group’s first overseas battery cell plant.
But as speculation mounts about how much the two governments offered, previous spending, the latest federal budget, and hundreds of millions of dollars tabled in competing Oklahoma, provide some telling clues.
Volkswagen and its in-house battery unit PowerCo announced their plan to build the new cell plant in St. Thomas, Ont. March 13. No details about the total value of the investment, size of the plant, or government backing for the project were announced, though an event in the city midway between Toronto and Windsor, Ont. in the coming weeks is expected to shed further light on the specifics.
Exactly what portion of plant set-up costs would fall under the proposed tax credit is not yet clear, but if Volkswagen’s choice of Ontario over competing jurisdictions in the United States is any indication, Ottawa’s new incentive is likely to boost government’s share of investment substantially above its traditional 20 per cent.
“In Oklahoma, [Volkswagen] could have had a similar investment to what the feds and province provided last year for Windsor, plus whatever the IRA would have provided, which is quite likely over several years, several billion dollars.”The Ontario plant is not expected to begin production until 2027, and ramp-up times at cell plants are rarely quick, said Conrad Layson, senior alternative-propulsion analyst at the U.S.-based forecasting firm AutoForecast Solutions.
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