Toyota will assemble an electric version of its popular RAV 4 SUV in Woodstock, Ont. ((Dave Chidley/CP))

There is more good news for Ontario's recovering automotive sector. Toyota has decided to assemble the electric version of its popular RAV4 SUV in Woodstock, Ont.

One provincial source says Toyota chose Woodstock because of Ontario's "continued commitment to electric vehicles" and ongoing support of the auto industry.

The Canadian and Ontario governments recently gave Toyota $141.6 million in grants and loans to upgrade its southern Ontario plants in Woodstock and nearby Cambridge.

Ontario offers consumers who buy or lease electric vehicles between $5,000 and $8,500 in incentives, with the goal of having one out of 20 vehicles in the province electrically powered by 2020.

Premier Dalton McGuinty will visit Woodstock on Friday for the formal announcement, which the government says will secure 6,500 jobs at the two Toyota plants in Ontario plus thousands of supplier jobs.

'We're on the right track'

The announcement comes after General Motors said earlier this week it will invest $117 million to prepare its Oshawa, Ont., assembly plant to build the new Cadillac XTS next year.

GM said the move will create or save 400 jobs at its Oshawa plant, which has seen expanded production and new vehicle models in the past year that added two new shifts and 1,300 jobs.

The conventional gasoline version of the RAV4 sold in North America is already built in Woodstock. More than 151,000 of the small sport utility vehicles were built at the plant in 2010.

"Every U.S. state and Canadian province would want to be home to electric vehicle manufacturing," said a Liberal source. "Toyota chose Ontario. It confirms we're on the right track."

The Japanese automaker showed off the RAV4 EV during the Los Angeles auto show last November, but said at the time it had not decided on a location for final assembly of the small SUVs.

Industry insiders had predicted the electric RAV4 would be assembled at a former Toyota-General Motors auto assembly plant in Fremont, Calif., owned by Toyota's partner in the electric car, Tesla Motors.

Toyota said the electric RAV4 will go about 160 kilometres on a single charge, and will includes batteries and power-train components made by Tesla Motors of Palo Alto, Calif.

Tesla, the maker of electric Roadster sports cars, signed a three-year agreement with Toyota in July to supply power-train equipment worth about $100 million. Toyota purchased a 2.9 per cent stake in Tesla last year.

Toyota actually built electric versions of the RAV4 between 1997 and 2003 in limited runs that were leased to utilities, cities and businesses.