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Volkswagen Group Canada Inc. plans to eventually manufacture solid-state batteries at its planned gigafactory in St. Thomas, Ont., says chief executive Vito Paladino.

Volkswagen AG, which owns many brands, including Audi — where Paladino is also CEO for Canada — has long signalled its interest in solid-state battery technology, but lithium-ion batteries and lithium phosphate batteries are more prevalent today. Many, if not all, of VW’s EVs currently use lithium-ion batteries, and one industry source said the company will produce those batteries in the short term.

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“As far as the technology, it is evolving fast. It is incredible,” Paladino said. “It’s tough to talk specifics because I know I’ll get myself into trouble, but what I will say is, and what we have reported, the solid-state battery will allow us to provide electrification in a more affordable way.”

Paladino made his comments in response to a question about consumer sentiment around EVs, saying climate change makes it necessary to move away from internal combustion engine vehicles. At the same time, he said “affordability” is still an issue for many people when it comes to EVs.

“The battery plant that we have in Canada will be solid-state batteries,” he said. “These batteries will have a cost benefit, but they’ll also have way more range and performance.”

Powerco Canada Inc. — VW’s battery manufacturing subsidiary — said in December that the site was ready for groundbreaking and that construction of the $7-billion St. Thomas gigafactory would begin this year with a goal of producing batteries by 2027.

A spokesperson for Powerco did not return calls seeking comment by the time of publication.

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In December, it described the solid-state cell as “the battery of the future,” which would cut charging time, extend driving range and maintain safety standards. Whereas lithium-ion batteries use liquid electrolytes, solid-state batteries use solid electrolytes to carry charges, which may improve charging times and make them less prone to catching fire.

VW has invested hundreds of millions of dollars into California-based Quantumscape Corp., a tech startup working on solid-state batteries. In January, Reuters reported that VW was in talks with Blue Solutions SAS, a solid-state battery company with operations in Boucherville, Que., that is now owned by the French conglomerate Bolloré SE.

A spokesperson for Blue Solutions was not immediately available for comment.

Regardless of whether solid-state batteries are currently ready for mass commercial production, VW’s planned battery plant in St. Thomas remains a year away from initial production.

VW made headlines in Canada when it announced the plant in 2023. It marked the first time in years that Canada attracted a new automaker to build out its supply chain here. The past few decades have been characterized by automakers closing operations here and moving to cheaper jurisdictions, such as the U.S. south and Mexico.

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The town of St. Thomas has historically been an auto industry town and VW’s decision to build a battery factory approximately the size of 210 football fields marks a revival of sorts.

So far, it would be the largest EV supply chain investment in Canada, although there are reports that Honda Motor Co. Ltd. may soon announce plans to manufacture battery cells and EVs on an even larger scale.

Such projects have been beset by controversy over whether the government incentives that entice automakers to build here end up cancelling out any economic benefits from the jobs and tax base created by the operations.

The Parliamentary Budget Office described the economic impact of VW’s proposed plant as “marginal,” though that report has also been critiqued by industry advocates as too simplistic.

Regardless, there are now questions about the pace of the EV transition.

In 2023, sales of passenger EVs in Canada declined by 12.6 per cent from a year earlier, although sales of commercial EVs, a larger category that includes SUVs, minivans and other vehicles, increased by 85 per cent.

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Overall, total sales increased 49 per cent to 185,300 vehicles sold in 2023 from about 123,500 vehicles sold in 2022.

Paladino said Canada’s EV mandate may be creating pushback from consumers and there is still more work to be done to make EVs more affordable, including creating more charging stations, especially in condominiums.

But he said EVs offer “a more polished driving experience” and better performance than their internal combustion engine counterparts.

“We’re living it every day and we see the path forward,” he said. “It’s more about how we ensure our consumers come along for the journey in a way where they’re excited about it and not being forced to do it and this is why … we’re growing the portfolio.”

Paladino said Audi Canada Inc. is set to introduce a slate of new EVs in every segment during the next six to eight months.

It will also continue to produce internal combustion engine vehicles “because we know some customers aren’t all the way there yet,” Paladino said.

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There’s also research underway to redesign vehicles so that the interior is more like “a moving living room,” he said. “It will be extremely comfortable, so maybe you’re not staying overnight at that hotel. You are jumping in your car and you are able to get some rest, do some work and get home.”

• Email: gfriedman@postmedia.com

Clarification: Vito Paladino originally said the plant would make solid-state batteries, but a spokesperson later said he meant to say the plant would eventually make solid-state batteries.

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