Canada on Tuesday announced tentative agreements with Volkswagen and Mercedes-Benz that would see the two European automakers tap into burgeoning North American supply chains to challenge Tesla in the electric vehicle market.
The declarations of intent were signed during a visit to Canada by Federal Chancellor Olaf Scholz, who wants to secure Germany’s access to new energy sources and intensify bilateral trade relations.
The agreements “will help us meet the growing demand for electric vehicles both here at home and around the world,” Canadian Prime Minister Justin Trudeau tweeted.
Scholz commented in a statement that the collaboration, particularly in securing critical battery inputs like lithium, nickel and cobalt, “could encourage other companies to follow.”
Mercedes-Benz plans to partner with Canadian companies in the electric vehicle and battery supply chains, including Rock Tech Lithium, to supply up to 10,000 tons of lithium hydroxide annually from 2026.
The Volkswagen agreement focuses specifically on the production of battery precursor and cathode materials. Volkswagen’s newly formed battery company PowerCo will also open a Canadian office.
“Working with governments around the world is an absolute requirement to achieve our climate goals,” Volkswagen CEO 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 enable a rapid and sustainable ramp-up of battery capacity – an important lever for our growth strategy in North America,” he added.
The agreements follow several other deals announced by the industry, including Stellantis in March to manufacture electric vehicle batteries in Canada.
Meanwhile, Ottawa has increased its support for domestic exploration for critical minerals used to make electric vehicle batteries.
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