Volkswagen Group and its battery company PowerCo have picked Canada for its first overseas battery cell factory.

The plant, located in St. Thomas, Ontario, will produce battery cells beginning in 2027, according to the German automaker. PowerCo, a VW company that launched in July 2022, will handle the automaker’s global battery business, including sourcing raw materials, cell production and manufacturing at the Canada location.

The North American battery factory is part of VW Group’s broader global plan to cut battery costs in half.  The automaker plans to build six factories in Europe. Construction has started at locations in Salzgitter, Germany, and Valencia, Spain. The Canada location will be the site of its third factory and the first in North America.

Image Credits: VW Group

Volkswagen said the location is proof of its “ambitious growth strategy” in North America. The company pointed to other expansion plans in the region, including the launch of the U.S.-focused Scout brand. This more than doubles the number of EV chargers in the U.S. and Canada through its Electrify America subsidiary and software arm Cariad establishing offices in Seattle and Silicon Valley.

Earlier this month, VW spinout Scout announced plans to build its $2 billion factory in South Carolina. Scout was launched as a rugged EV brand aimed at U.S. consumers. The factory, located near Columbia, will be capable of producing 200,000 EVs a year. Production is scheduled to begin by the end of 2026.

Volkswagen also noted that it has ramped up assembly of the all-electric ID.4 compact SUV in Chattanooga, Tennessee, and plans to upgrade its plants in Puebla and Silao, Mexico, for the assembly of BEVs. The Mexico factory may also be used to produce BEV components such as electric motors in the second half of the decade, the company said.