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Volkswagen picks Ontario for first battery factory outside Europe

The facility in St. Thomas, Ont. is expected to begin production in 2027

In this Thursday, March 8, 2018 photo Volkswagen cars are pictured during a final quality control at the Volkswagen plant in Wolfsburg, Germany. Germany's Volkswagen, Europe's largest automaker, is warning the Trump administration's decision to impose tariffs on aluminum and steel imports from Canada, Mexico, and the European Union could start a trade war that no side would win. (AP Photo/Michael Sohn)
The Volkswagen Group has picked St. Thomas, Ont. for the site of its first battery cell factory outside of Europe as the carmaker's first ramps up expansion in North America. (AP Photo/Michael Sohn) (ASSOCIATED PRESS)

The Volkswagen Group has picked St. Thomas, Ont. for the site of its first battery cell factory outside of Europe, as the carmaker ramps up expansion in North America.

The German carmaker made the announcement Monday, with production expected to start in 2027.

"We now have the unique opportunity to grow profitably in North America and play a key role in driving the transition to electric mobility there," Volkswagen chief financial officer Arno Antlitz said in a statement.

"We will be able to address an even broader range of customers. Volkswagen has the right strategy, products and scale to take a strong position in the North American market."

Volkswagen previously signed a memorandum of understanding with the Canadian government to boost cooperation on the development of battery production, with a key focus on supplying minerals such as lithium, nickel and cobalt.

"Today’s news is a major vote of confidence in Canada and Ontario, and in our shared work to position the country and the province as a global leader on the electric vehicle supply chain," federal innovation minister François-Philippe Champagne and Ontario's minister of economic development Vic Fedeli said in a joint statement.

"This investment is another significant step forward as we build a clean transportation sector to meet global and North American demand for zero-emission vehicles."

The federal and provincial governments did not say how much money is being put forward for the projects. Each level of government has provided hundreds of millions of dollars in financial assistance to other electric vehicle production projects.

Volkswagen is the latest automaker to select Canada as the site for production related to electric vehicle manufacturing. Stellantis and General Motors previously announced plans to open new manufacturing facilities in Ontario and Quebec, respectively, while Ford said it will retool its Oakville assembly plant to build battery electric vehicles.

Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.

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