Volkswagen announced on Monday that it will build its first battery cell plant in North America in Canada, enabling its cars to receive subsidies from the U.S. government that require batteries for electric vehicles to be made with North American materials, Reuters reported.
Under the U.S. Inflation Reduction Act (IRA), cars can only receive thousands of dollars in subsidies if a certain percentage of the key minerals in the battery are mined or processed in the U.S. or a country with which the U.S. has a free trade agreement, or if they are recycled in North America.
Volkswagen confirmed last December that it was looking for a site within Canada to build a plant to ensure access to the key raw materials needed for batteries, six months after signing a memorandum of understanding with the Canadian government.
“With the decision to proceed with battery cell production in Canada and to build a Scout-branded plant in South Carolina, we are fast-tracking the execution of our North American strategy.” Volkswagen Chief Executive Oliver Blume said in a statement Monday.
The automaker said last week that its Scout brand will build a $2 billion (currently about RMB 13.88 billion) manufacturing plant near Columbia, S.C., for trucks and SUVs, with production scheduled to begin in 2026.
Volkswagen has long said it is working to build regional supply chains in Europe, North America and China for electric vehicle production, given high transportation and logistics costs, supply chain risks and geopolitical tensions. The company said last week that the IRA incentivized the company’s decision to prioritize investment in North America, adding that plans for a battery plant in Europe are still in the works, but waiting to see if the IRA spurs better incentives in Europe.
