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.<br><br>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.

This case may be used in courses on strategy, international business, or business and politics. The case provides a foundation to discuss factors influencing investment location choices with a special focus on the political dimension, including clean energy and industrial policies. After working through the case and assignment questions, students will be able to<ul><li>appreciate the variety of objectives that governments may pursue with their industrial policies;</li><li>explain how multinational enterprises can navigate national policy environments;</li><li>prepare an international location decision for a mega investment project;</li><li>communicate strategic decisions to external stakeholders; and</li><li>devise an implementation plan for a mega investment project (B-Case).</li></ul>

• location
• investment decisions
• electric vehicles
• government policy