Volkswagen announced that its first gigafactory in North America will be located in the city of St. Thomas in the Canadian province of Ontario. By establishing a battery plant in North America, Volkswagen hopes to meet a major requirement to enable its EVs to be eligible for the US federal tax credit of $7,500.

According to VW, the St. Thomas plant “will equip the Group brand’s BEVs in the region with cutting-edge battery cells.” The company signed a memorandum of understanding with Canadian Prime Minister Justin Trudeau’s government last August that focuses on “battery value creation and raw material security in order to promote e-mobility in the country.”

In 2021, VW unveiled plans to build six battery cell production plants in Europe by 2030, including the facility in Salzgitter and one in Skelleftea, Sweden. A third plant is under construction in Valencia, Spain, and the fourth factory will be based in Eastern Europe. The plants will eventually have a production capacity of 240 gigawatt-hours a year.

Starting in 2023, VW plans to roll out a new unified prismatic cell design of its batteries that will be installed across the automaker’s brands. The goal is to have this unified cell design powering up to 80 percent of VW’s electric vehicles by 2030. VW also has contracts with two other major battery producers, Samsung and CATL. And the company is backing a startup based in San Jose, California, QuantumScape, which is working on more energy-efficient solid-state batteries.

VW is also building electric trucks and SUVs under its new Scout brand, with a specific focus on American car buyers. The company recently announced plans to build a vehicle assembly plant in South Carolina. In a statement, The automaker’s EV lineup for North America consists only of the ID.4 SUV. Soon to be released include the ID.7 sedan and ID Buzz electric minivan. VW Group CEO Oliver Blume said the Ontario gigafactory will be crucial to that effort.

“Our North American strategy is a key priority in our 10-point-plan that we’ve laid out last year,” Blume said. “With the decisions for cell production in Canada and a Scout site in South Carolina, we’re fast-forwarding the execution of our North American strategy.”

The factory is also part of a host of new EV facilities that are expected to come online in the coming years. Globally, battery production is expected to grow from 95.3 gigawatt-hours (GWh) in 2020 to 410.5 GWh in 2024, according to GlobalData, a data and analytics company.