Volkswagen’s decision to build an electric vehicle battery plant in Southwestern Ontario hits the accelerator on the technological transformation of the region’s manufacturing sector and gives Windsor another economic turbocharge in the opinion of local business and economic development officials.
Volkswagen confirmed this week it’ll build a plant in St. Thomas that will begin production in 2027. Windsor’s NextStar Energy battery plant, a joint venture between LG Energy Solution and Stellantis, will begin some production in 2024.
“Southwestern Ontario has for decades been the manufacturing centre of Canada and is in the centre of manufacturing for North America,” said Steve Del Duca, president of Ro-Matt International and vice chair of Automate Canada.
“The battery plants are doing the same thing for us in a new industry. The technology required in these plants forces us to raise our game.
“It’s going to take us from a blue-collar manufacturing area to more of a technology area.”
Volkswagen will become the sixth original equipment manufacturer (OEM) to locate a production facility in Ontario, unmatched by any other jurisdiction in North America. Those companies also represent six of the seven largest automakers in the world.
With Volkswagen, LG and Stellantis all investing billions in battery manufacturing in Southwestern Ontario, Del Duca said the region must be recognized as a serious player in the battery industry.
“I expect other nations to view Canada differently,” Del Duca said.
“The new plant definitely provides us with opportunities down the road. The sophisticated technology and automaton required will be up there with what we do in automotive plants.”
Invest WindsorEssex vice president of investment attraction and strategic initiatives Joe Goncalves said the addition of the Volkswagen plant bolsters Windsor’s sales pitch.
Volkswagen joined CATL and Ford Motor Company, which are partners on a new battery plant to be built in Marshall, Michigan, in announcing facilities in the Great Lakes basin in the past month.
“We’re not just talking with companies that supply LG, but also supply Samsung, CATL, Ford and now VW,” Goncalves said.
“We’re talking right now with four of CATL’s suppliers looking to supply both the CATL plant and LG. We’re also reaching out and connecting them and LG Energy Solutions.
“Now we can look at VW’s suppliers in Europe. It makes it easier when you also have plants in Michigan, Ohio, Indiana and two in Ontario to supply.
“This really adds value to Windsor’s proposition and lessens the risk to suppliers.”
South Korean supplier Dongshin Motech, which will produce aluminum battery casings, is currently building a $90-million plant in Windsor that will employ about 300 people. A second supplier, which handles materials, is finalizing the details for a Windsor plant that will employ 180.
Goncalves said in addition to Windsor’s prime geographical position on the U.S. border, its Canadian location also offers benefits to companies of qualifying under the CUSMA content laws for batteries that take effect in mid-2025 while having free-trade agreements with more countries than the U.S.
Windsor-Essex Regional Chamber of Commerce CEO Rakesh Naidu noted the region’s long history in the automotive industry and proven ability to innovate to improve quality and reduce costs leaves it well positioned to serve a new industry.
“This is a huge opportunity for us,” Naidu said.
“We know how to take products and processes and make them better and more efficient. To encourage more EV adoption, costs must come down.
“This is where Windsor Essex has a leg up over the competition. We know how to do that better than other places.”
With a second battery plant, growing EV supply chain and a domestic mining industry expected to expand exponentially, the impact of the battery industry will ripple across all sectors of Ontario’s economy.
Local housing, construction and education will all be directly impacted while retail outlets will benefit from the area’s rising population and demand for services.
“Many sectors are going to benefit from this,” Naidu said. “Even businesses not directly tied to manufacturing.”