Ground-breaking is scheduled for next year, with manufacturing beginning in 2027. Credit: Ren茅 Hesse from Pixabay.

The Canadian Federal Government and German carmaker have agreed to invest more than C$20bn ($14.8bn) for the construction of a battery gigafactory in St Thomas, Ontario, according to .

This funding is claimed to be the biggest single investment in the country鈥檚 electric vehicle (EV) supply chain.

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In a statement, Volkswagen said that the company is investing C$7bn ($5.16bn) to develop the facility.

In a separate statement, the federal government added that it will grant C$13.2bn ($9.74bn) in manufacturing tax credits up until 2032, matching the $35 per kilowatt-hour in production subsidies provided by the US Inflation Reduction Act (IRA).

The government will also offer a C$700m ($516.46m) grant.

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Ontario’s provincial government will additionally fund the automaker with C$500m ($368.90m) in direct investment, along with millions of dollars for maintaining local infrastructure.

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Canada Prime Minister Justin Trudeau told reporters, 鈥淚t鈥檒l be worth over C$200bn to the Canadian economy over the coming decades. anchor for Canada鈥檚 electric vehicle supply chain.

鈥淚t will provide millions upon millions of batteries to power Canada鈥檚 auto industry … and the economic impact of this project will be equal to the value of government investment in less than five years.鈥�

The battery plant is expected to be Volkswagen鈥檚 largest, creating approximately 3,000 jobs. Ground-breaking is scheduled for next year, with manufacturing beginning in 2027.

St Thomas mayor Joe Preston said: 鈥淭his secures the future of St Thomas. It gives us the opportunity to be a great place to live, with good, high-paying jobs for a long time looking into the future.鈥�