Volkswagen Group’s $7 billion funding in Canadian battery cell manufacturing means it’s not business-as-usual for the German automaker’s manufacturers in Canada.

Gross sales development is each an aspiration and an expectation as the corporate builds its first vital manufacturing footprint within the nation, stated Pierre Boutin, CEO of Volkswagen Group Canada.

“We don’t make these investments to have the established order,” he instructed Automotive Information Canada. “We have to choose up quantity and we consider additionally with the electric-vehicle lineup we’ve that we’ve an edge on a lot of our opponents, so we are able to develop quicker than most.”

The German automaker, which was lambasted for its environmental file lower than a decade in the past following the so-called dieselgate emissions dishonest scandal, is now driving shortly into zero-emission automobile and battery cell manufacturing.

For the Canadian workforce, Boutin stated, the arrival of Volkswagen battery subsidiary PowerCo will heap on added stress, however “we’re up for the problem.”

“We’re going to show what might be accomplished right here in Canada in order that additional funding might be checked out sooner or later, in order that we proceed to develop.”

VW Canada was indirectly concerned within the group’s choice to web site its inaugural North American battery cell plant in St. Thomas, but it surely did guarantee early on that Canada was thought-about, Boutin stated.

Equally, as PowerCo prepares to interrupt floor on the 370-acre web site halfway between Toronto and Windsor subsequent 12 months, its Canadian gross sales and advertising arm will play a minimal position. PowerCo will function within the nation as its personal entity, in accordance with VW Canada spokesman Thomas Tetzlaff.

However the German automaker’s sequence of EV investments in North America, which additionally embody retooling at its Chattanooga, Tenn., meeting plant over the previous a number of years and the lately introduced Scout Motors plant in Blythewood, S.C., are designed partly to energise the corporate’s gross sales in Canada and the USA, Boutin stated.

‘WE WANT TO GROW’

Volkswagen is the market chief in Europe and a number one model in China, so “the largest alternative for our firm is North America,” he stated. “We’re investing as a result of we wish to develop.”

Volkswagen Group was the second-largest automaker by quantity globally final 12 months, but it surely positioned seventh in Canada amongst full-line automotive corporations, in accordance with the Automotive Information Analysis & Information Heart in Detroit. Throughout its steady of manufacturers, led by Volkswagen and Audi, the corporate bought 85,859 automobiles in 2022, accounting for five.7 per cent of the general Canadian market. In pre-pandemic 2019, the group held a 5.8 per cent market share in Canada, promoting 112,537 automobiles.

The brand new Canadian manufacturing presence is definite to up the corporate’s profile throughout the nation, and will result in increased gross sales, in accordance with native Volkswagen supplier Michael Dalglish.

“I believe it alerts a brand new period for Volkswagen in Canada and North America, and fortunately, right here, I’m on the doorstep,” stated Dalglish, the supplier principal of Dalmar Motors and Audi London.

Dalmar Motors, now in its second era, opened in London, Ont. in 1953, a number of months after the primary Volkswagen automobiles arrived in Canada.

After a number of years of relocation work, Dalglish opened the doorways at a brand new 43,000-square-foot (4,000 square-metre) dealership on the southwest finish of town just some weeks in the past. The brand new retailer is lower than 20 kilometres from the deliberate St. Thomas cell plant, a brief drive throughout a handful of farm-lined nation roads.

Dalglish stated he expanded on the new location “with development in thoughts,” regardless of a warning from VW Canada that the relocated dealership was bigger than wanted for the gross sales quantity it at the moment has. Between the corporate’s upcoming EV lineup and the advantage of native battery manufacturing, Dalglish has little doubt the additional service bays and floorspace he invested in will likely be stuffed out in brief order.   

VW ’MONEY WHERE THEIR PROMISES WERE’

“There have been, through the years, guarantees of nice volumes and going to the subsequent stage. The distinction this time is Volkswagen’s put the cash the place their guarantees have been.”

To what diploma the Canadian battery plant will translate to increased gross sales is troublesome to estimate, Dalglish stated, however he’s enthusiastic about its potential to drive model consciousness, and the added consideration paid to the Canadian market by high firm brass in Wolfsburg, Germany.

If different automakers with native manufacturing footprints are any indication of gross sales potential, Volkswagen might discover itself including to its quantity. Of the six top-selling automakers in Canada, all however one assemble automobiles within the nation.

Whereas Volkswagen will likely be constructing batteries not automobiles, the brand new cell plant ought to decrease prices for the costliest element in Volkswagen’s future EVs, Boutin stated.

About 40 per cent of the price of an EV is the battery, and since batteries will now be produced in Canada, they are often bought to Canadian shoppers with out added forex fluctuations, which have sometimes favoured the American greenback and Euro, he added.

“This gives us with a further aggressive edge.”