Dive Brief:
- Volkswagen and its battery subsidiary PowerCo SE expanded an agreement with the government of Canada to scout suitable sites for the automaker's first gigafactory in North America, according to a Dec. 1 news release.
- Volkswagen is accelerating the expansion of its battery business to meet rising electric vehicle demand in the region. “Canada is one logical option for the construction of a gigafactoy in the region … the country offers high sustainability standards and ideal economic conditions,” CEO Oliver Blume said in a statement.
- PowerCo and materials technology company Umicore also agreed to investigate a strategic supply agreement for cathode material, a key component of lithium-ion batteries, for North America.
Dive Insight:
The addendum builds on a memorandum of understanding Volkswagen signed with Canada in August to ramp up sourcing efforts for raw battery materials in the country.
Mercedes-Benz inked a similar deal at the time, agreeing to explore opportunities for mining, refining and cell manufacturing in Canada.
As more OEMs redirect their operations to qualify for consumer tax incentives in the Inflation Reduction Act, many are landing in Canada. The country meets provisions in the bill that require battery components to be primarily sourced or produced in North America or countries with U.S. free trade agreements.
Volkswagen’s battery company is also expanding its partnership with Umicore for sustainable cathode materials as it works to establish production in North America. The additional supply agreement aims to secure materials at cost competitive prices and affirm delivery agreements for future production in Canada, according to the release.
Deliveries from the cathode supplier are planned to start in 2027. To handle the rise in material orders, Umicore plans to break ground on a plant for the large-scale production of cathode materials and precursors in Canada, which the companies said in the release will be the first of its kind in North America.
Canada is on Volkswagen’s shortlist for a North American plant, according to Thomas Schmall, Volkswagen Technology board member and chairman of the Supervisory Board of PowerCo SE, said in a statement.
“PowerCo will conduct intensive negotiations with all parties concerned in the near future with a view to identifying the most competitive site,” he added.
