OTTAWA: Canada announced on Tuesday (Aug 23) tentative deals with Volkswagen and Mercedes-Benz that would see the two European automakers tap into burgeoning North American supply chains as they seek to challenge Tesla in the electric vehicle (EV) market.
The memorandums of understanding (MoU) were signed during a visit to Canada by German Chancellor Olaf Scholz, who is seeking to firm up access to new energy supplies for Germany and deepen bilateral trade ties.
The agreements “will help us meet growing demand, both here at home and around the world, for electric vehicles”, Canadian Prime Minister Justin Trudeau tweeted.
No financial details were disclosed.
Scholz commented in a statement that the cooperation, notably in the securing of critical battery inputs such as lithium, nickel and cobalt, “may encourage other companies to follow”.
Mercedes-Benz said it envisages partnering with Canadian companies across the electric vehicle and battery supply chains, including Rock Tech Lithium for the supply of up to 10,000 tonnes of lithium hydroxide annually, starting in 2026.
The Volkswagen agreement specifically focuses on the production of battery precursor and cathode materials. Volkswagen’s newly formed battery company PowerCo will also open a Canadian office.
“Working hand in hand with governments around the world is an absolute prerequisite to meet our climate goals,” Volkswagen chief executive Herbert Diess said in a statement.
“The supply of battery raw materials and the production of precursor and cathode materials with a low carbon footprint will allow for a fast and sustainable ramp-up of battery capacity – a key lever for our growth strategy in North America,” he added.
Volkswagen aims to build, with partners, six large battery cell factories in Europe by 2030 with a capacity of around 240 gigawatt-hours, as well as a dedicated factory in North America for which it is currently examining potential sites.
The German carmaker is targeting initial capacity of 20 gigawatt-hours at the North American plant, said Thomas Schmall, Volkswagen AG board member and head of the automaker's Power Co battery unit.
At a media briefing on Tuesday, Schmall said the company aims to announce the North American plant location and potential mining and refining partners by the end of the year.
“Everything in our planned rollout of electric vehicles depends on the supply of batteries,” he said.
Mercedes-Benz, meantime, is preparing to go fully electric by the end of the decade wherever market conditions allow, and has recently struck a deal with China's CATL to ensure battery cell supply in Europe.
Volkswagen has said it could become a shareholder in local mining firms to make sure it is first in line when it comes to supply. – AFP, Reuters