Volkswagen AG: A New Electric Vehicle Battery Plant (A)

Volkswagen AG (VW) was global leader in the automotive industry that had made a major commitment to accelerate its manufacture of electric vehicles (EVs). To achieve this, the company had established a subsidiary, PowerCo, which was to build its own battery cell plants. Following the announcement of new industrial policies to support EV manufacturing in the USA by the Biden administration, PowerCo was considering where in North America to build its plant. Options included the US states in which VW was already assembling cars, and suitable opportunities for a plant location were also being offered by the Canadian province of Ontario given the availability of key resources (i.e., land and clean water and electricity supplies) and a favourable federal and provincial government attitude.

The case provides opportunities to discuss locational advantages that may attract mega manufacturing projects, to analyze policy-related aspects of such locational advantages, and to explore how businesses can negotiate with governments over major investment commitments.