Electric Autonomy gets exclusive insight into VW’s Canadian business plans in a one-on-one interview with VW Canada president and CEO Pierre Boutin
Volkswagen is making a decisive electric vehicle-focused landing in Canada with a $20-billion battery cell factory in St. Thomas, Ont., and an office for its new battery entity, PowerCo.
The decision to expand VW in Canada in such a significant way will have an impact on the company and the country for decades to come.
Pierre Boutin attended Electric Autonomy‘s EV & Charging Expo this month to give a keynote address on Canada’s EV ecosystem.
Following the event, Electric Autonomy sat down with Boutin for an exclusive interview about the German automaker’s intentions for Canada. Will VW stop at a battery factory? How deep does its interest in securing Canada’s critical battery minerals go? What should St. Thomas expect from one of their largest future employers?
These questions and more are all answered in the following interview, which has been edited for length and clarity.
VW’s Canadian mining intentions
Electric Autonomy: VW seems to be doing the “Apple approach” where it’s vertically integrating and having that end-to-end control. So, what does that mean for mining in Canada and VW’s interests there?
Pierre Boutin: I will not talk about Canada, specifically. I will just simply say that, obviously, as you notice, yes, we want to manufacture our own batteries. So that leads us to a lot more conversation with the mining industry around the world. And then from there, we have to make some decisions, right? It’s important for us to certainly, as much as you can in the mining world, secure what we need to build these batteries. These are the fundamental materials we need to manufacture the batteries. Our supply chain is our lifeblood. Definitely we’re learning a lot more about the mining industry, about what it’s all about. And we’re eager to build a stronger relationship with them, because we definitely need their expertise for us to continue on this, this momentum of building sustainable mobility.
Electric Autonomy: What does that look like for VW in Canada? Is that a joint venture? Is that buying a stake in a mine?
Pierre Boutin: I think it’s too early to tell. Not so long ago our core business was assembling vehicles or designing vehicles and buying parts from 1,000s of suppliers. Now, last year, PowerCo was created. These are significant changes to our business model. And you have to understand what you’re good at, what you can learn (potentially) and be really good at and be competitive in the world and what maybe is not your business.
I’ll give the example of Electrify Canada/Electrify America. We started slow. It’s not only here, it’s also in Europe and also in China. We now feel that we can bring a lot of value to the development of the charging infrastructure. We are credible because we can compare ourselves with others. We’ve learned a lot and this has created a new business model. So, first things first, I would say we’re focusing on battery cells manufacturing and this is where it is at at this stage. What will come will come in the future? We’ll see really it’s based on experience, based on if we feel we can bring additional value to the supply chain. Maybe we’re going to go deeper. Maybe not.
Engineering next-generation vehicles
Electric Autonomy: VW is obviously a legacy company. It’s been making vehicles for a long time. From the inside, what’s it like having to go through this huge evolution with these new relationships that you never used to have before with mining companies and charging networks. What’s that been like culturally for VW?
Pierre Boutin: It is very challenging, but it’s also very rewarding in many ways. We’re learning. We understand what used to be our business model is no longer viable. That’s why we had this sense of urgency to make sure we can sustain our or future, right? Build a stronger future. And from there it was, ‘Okay, what role we want to play?’ And as I mentioned, like any innovation, we tried certain things that maybe didn’t work as well and we’re shifting a little bit. But the strategy was put in place: the new auto strategy.
Electric Autonomy: And what is that strategy, specifically?
Pierre Boutin: We made the decisions regarding having a power unit and I talked about charging infrastructure elements and charging development around the world, talked about PowerCo, obviously, which is part of it, and we’re getting into a lot of different fields. So, our strategy has been, really, we need to ensure that in order for us to be a major player in the future, we want to lead.
I can add to this, for instance, through our company called CARIAD we want to own our own connectivity system. We don’t want to go to the Apples and Googles of the world because we believe the data of our customers will definitely help us build a future in the vehicles and will help us build a stronger future. Now, these are major investments, we’re making this a huge learning curve. But we feel it’s too strategic to let go, just like the batteries itself.
Electric Autonomy: How is VW’s foundation of engineering playing into battery development?
Pierre Boutin: Batteries are a chemical reaction, right? You need to find more efficiencies in terms of reducing your costs and in terms of expanding your range. Engineering is the heart of our company. So we feel that now it’s chemical engineering, it’s mechanical engineering, it’s something else. But we feel we can definitely make major progress. And there’s no choice. If you don’t transform you’re doomed to disappear.
You look at where we are today, I think we’re surprising, probably, a lot of people. But we’re on the right track, it’s a good transformation. Are we having some hiccups here and there? Absolutely. That’s what happens when you transform, right? But the vision is there and the investment is there, too. So we continue to invest extensively. Why? Because speed is of the essence if we don’t want to disappear, if we don’t want to be marginalized in the future. We want to take a leadership role in sustainable mobility and everything related to it.
VW integrating into Canada
Electric Autonomy: So there was a lot of curiosity about the deal with St. Thomas and how that all came about? Obviously, it’s a huge sum of public money. From the negotiating process, how would you describe that journey with all the stakeholders that were involved compared to other negotiations VW has gone through? Was this different or in any way unique?
Pierre Boutin: I’m not going to make much comment on this, because I was not part of all these negotiations. So I don’t want to comment on things I don’t know. I think what I would say is, let’s look at the end results. People came together, trusted each other, and signed some serious agreements to transform, certainly, our company further and, certainly, the automotive industry in Ontario and throughout Canada. I think that’s the most important element, right?
Just like we’re learning, everybody needs to learn because these are new technologies. There are new fields for everyone and everybody’s stretched. You take the risk or you don’t take the risk. But I stress without partnership, there is no future. Nobody can make this happen alone. Nobody right now. So, if we want to have an impact on climate change, all the major players need to come around the table and take a part of the responsibility for the future. As powerful as our company can be alone, it’s impossible to make it happen. And we don’t believe anyone can make it happen.
Kudos to the Canadian team, they saw there’s that alignment on the values, alignment on where people want it to go and people around the table made what they believe is the best decision for society, for our company, for citizens and so on. Time will tell. I’m sure we’re gonna read a lot of things over the next 5, 10, 15 years coming back to this deal.
Electric Autonomy: Speaking directly to Canadians in St. Thomas and surrounding areas, do you have a message for them about how VW is going to integrate into the community and for anybody who’s interested in joining?
Pierre Boutin: Everywhere we are — in many, many, many cities around the world — right through everything we do we always get involved with the community. The community is the heart of the success of our factory anywhere we put in these factories. So, to come in and expect that everybody’s happy in the morning and they leave at night and the production is there, that doesn’t happen without involvement in the community, without the pulse of the community, without the discussions with the community, without the involvement of us beyond the factory. And we’re very cognizant of this. We have a lot of experience running operations around the world. Now, the cultures are different, right? What does involvement mean in St. Thomas versus involvement in Salzgitter or in Valencia? But we believe it’s part of the success of this enterprise and it’s for generations to come.
These types of factories, to make any sense, have to run for decades. So you cannot be a fly-by-night in this business. It’s as simple as that. You’re all in and that includes, obviously, getting the pulse of the community, understanding what is happening playing your role, taking your responsibilities.