PowerCo Signs Dual Engineering Contracts to Advance Ontario Battery Plant Construction

According to foreign media reports, PowerCo, the battery subsidiary of Volkswagen Group, signed two major construction contracts on August 21. The company is currently preparing to break ground on its battery cell manufacturing plant in St. Thomas, Ontario, Canada, with an investment of $7 billion.

Image source: Volkswagen Group

PowerCo Canada has awarded the contract for the concrete foundations of the first three buildings of the aforementioned plant to Canadian construction company Magil Construction; Steelcon Group of Companies will be responsible for the fabrication and installation of structural steel for these buildings, covering a building area of approximately 850,000 square feet (about 80,000 square meters).

PowerCo CEO Frank Blome stated in a statement that the signing of these two contracts will propel the project (announced in March 2023) into the next phase. "The St. Thomas Gigafactory is a core pillar in our strategy to build a global battery enterprise with strong roots in Europe and North America. This setup will ensure that we have direct control over one of the key technologies of the 21st century."

Despite U.S. tariff policies and lower-than-expected electric vehicle adoption rates, which have prompted other automakers like Honda to suspend electric vehicle supply chain projects in Canada, Volkswagen Group has not changed its plans to establish a presence in Ontario. In addition to securing contracts for these two major core engineering packages, PowerCo launched a nationwide recruitment campaign on August 6 to hire hundreds of employees for the plant. The plant is scheduled to begin production in 2027, initially expected to directly create up to 1,000 jobs; once full capacity is reached, the number of jobs will increase to 3,000.

PowerCo's factory in St. Thomas is located between Toronto and Windsor, Canada. Once completed, it will become Volkswagen Group’s only battery cell production base in North America and is expected to supply batteries to Volkswagen Group’s assembly plants in the United States.

As of now, PowerCo Canada has not disclosed the specific amounts for the two construction contracts mentioned above, but the company stated that the concrete foundation engineering contract is one of the largest of its kind ever awarded in the southwestern region of Ontario. The project will consume over 32,500 cubic meters of concrete, a volume sufficient to fill approximately 1,000 standard shipping containers.

Since the announcement of the Canadian factory construction plan in 2023, PowerCo has stated that it will prioritize local suppliers. Both Magil and Steelcon, the companies awarded the contracts this time, are Canadian local enterprises.

With the signing of the two major core engineering package contracts, PowerCo plans to hold a groundbreaking ceremony in the coming weeks for what is the "largest single automotive industry investment project in Canada."