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Volkswagen, Mercedes to Buy Materials for EVs from Canada

By Rodrigo Andrade | Tue, 08/23/2022 - 15:11

German automakers Volkswagen and Mercedes-Benz signed a memorandum of understanding with Canada’s Prime Minister Justin Trudeau and Germany’s Chancellor Olaf Scholz to secure access to lithium, nickel and cobalt, critical materials to build the batteries used in electric vehicles (EV). The agreement involves Canada’s top supplier, which will expand its EV operations to compete with major players such as Tesla.

The agreement will allow Canada to secure its place in the supply chain of both companies. While no financial terms were reported, Herbert Diess, Chief Executive, Volkswagen, highlighted the importance of its strategy for the electromobility transition. “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,” said Diess, as reported by Reuters. 

Both companies are deploying electromobility strategies. Volkswagen plans to build six battery cells by 2030 with a capacity of 240 gigawatt in its plant in the EU and is evaluating sites to build a new plant in North America. On the other hand, Mercedes-Benz plans to go full electric at the end of this decade.

Many are planning for an EV future. Mexican President Andrés Manuel López Obrador announced that the country’s exploitation of lithium, a key element for EV batteries, will foster the automotive industry. “We have lithium that we could sell to anyone, but the priority is to strengthen the automotive industry in Mexico. We are analyzing this and we are very much looking forward to resolving our priorities based on the characteristics of the company,” said López Obrador, as reported by MBN.

US President Joe Biden’s administration recently approved the Inflation Reduction Act of 2022, which tax credits for EV assembled in North America, as reported by MBN.

Mexico’s EV market, however, is still small when compared to other regions. “What is happening in Mexico? Is our government investing in new clean energy generation facilities? Are we developing the required charging infrastructure? Are we going to be ready when we need to be ready? We must but we have not really invested in these areas and that is becoming a problem that will worsen when the world moves completely into the new era and we aren’t ready for it,” Fernando Enciso, Director, Surman Group, wrote in MBN.

Rodrigo Andrade Rodrigo Andrade Junior Journalist & Industry Analyst