Ground-breaking is scheduled for next year, with manufacturing beginning in 2027. Credit: René Hesse from Pixabay.

The Canadian Federal Government and German carmaker Volkswagen have agreed to invest more than C$20bn ($14.8bn) for the construction of a battery gigafactory in St Thomas, Ontario, according to Reuters.

This funding is claimed to be the biggest single investment in the country’s electric vehicle (EV) supply chain.

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In a statement, Volkswagen said that the company is investing C$7bn ($5.16bn) to develop the facility.

In a separate statement, the federal government added that it will grant C$13.2bn ($9.74bn) in manufacturing tax credits up until 2032, matching the $35 per kilowatt-hour in production subsidies provided by the US Inflation Reduction Act (IRA).

The government will also offer a C$700m ($516.46m) grant.

Ontario’s provincial government will additionally fund the automaker with C$500m ($368.90m) in direct investment, along with millions of dollars for maintaining local infrastructure.

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Canada Prime Minister Justin Trudeau told reporters, “It’ll be worth over C$200bn to the Canadian economy over the coming decades. anchor for Canada’s electric vehicle supply chain.

“It will provide millions upon millions of batteries to power Canada’s auto industry … and the economic impact of this project will be equal to the value of government investment in less than five years.”

The battery plant is expected to be Volkswagen’s largest, creating approximately 3,000 jobs. Ground-breaking is scheduled for next year, with manufacturing beginning in 2027.

St Thomas mayor Joe Preston said: “This secures the future of St Thomas. It gives us the opportunity to be a great place to live, with good, high-paying jobs for a long time looking into the future.”