Volkswagen and Canada sign MoU to advance sustainable battery supply chain in North America

Volkswagen AG and the Government of Canada have signed a Memorandum of Understanding (MoU) to promote emobility in the country and explore opportunities across Canada’s automotive and battery supply chain. 

Both parties will investigate opportunities for Canada to contribute to Volkswagen’s global and regional battery supply chains. PowerCo, the newly founded battery company of the Volkswagen Group, has a central role in these efforts. 

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PowerCo will drive forward the planned cooperation in the fields of battery value creation, raw materials supply chains and cathode material production in the North American region. It is responsible for all global Group activities along the battery value chain, securing battery cell supply for Volkswagen’s emobility push. 

The rapidly growing global battery cell business is a key pillar of Volkswagen’s ‘NEW AUTO’ strategy. This aims to make Volkswagen the leading provider of sustainable and software-driven mobility. 

The plan is to quickly build up highly standardised cell production capacities totalling 240-gigawatt hours per year in Europe alone. In addition, there are plans to establish a dedicated gigafactory in North America. Possible production sites are currently being examined.

François-Philippe Champagne, Minister of Innovation, Science and Industry, said: “Canada is quickly becoming the green supplier of choice for major auto companies, including leading European manufacturers, as we transition to a cleaner, greener future. 

“By partnering with Volkswagen, Canada is strengthening its leadership role as a world-class automotive innovation ecosystem for clean transportation solutions. Canada is committed to building a strong and reliable automotive and battery supply chain here in North America to help the world meet global climate goals.”

Volkswagen CEO Diess and Canadian minister Champagne (foreground), German Federal Chancellor Scholz and Canadas Prime Minister Trudeau.

Herbert Diess, Volkswagen Group CEO: “Volkswagen has been vigorously pushing the transformation to emobility, recognising the industry‘s responsibility in the global battle against climate change. The Group today not only offers the broadest range of electric models to customers but is also rolling out an ambitious battery and charging strategy. 

“Working hand in hand with governments around the world is an absolute prerequisite to meet our climate goals and I want to thank the Canadian government for their support. 

“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.“

For the development of sustainable battery production, both parties intend to boost cooperation based on recognised Environment, Social, Governance (ESG) criteria between PowerCo and the Canadian mining sector. This is seen as a world leader in terms of responsibility and transparency. 

For this purpose, PowerCo is planning to establish a new, dedicated liaison office in Canada. A key focus of cooperation is the supply of critical raw materials such as lithium, nickel and cobalt.

Thomas Schmall, Volkswagen Group Board of Management member for Technology: “As an automaker, we see compliance with stringent sustainability criteria as a top priority. 

“For us, the availability of power from renewable sources and a raw materials sector with mines supplying materials conforming to the globally recognised environmental and social standards are crucially important. That is why Canada is an ideal partner for our e-mobility and battery strategy.”

Both parties see significant prospects for Volkswagen and PowerCo to ramp up cathode material production together with partners. Plus, offer Canadian suppliers an opportunity to act as raw material suppliers, refiners and processors.

With its vast raw material resources, good infrastructure and highly developed automotive industry and highly qualified workforce, Canada sees itself as well-positioned for joint projects like this. 

Schmall added: “The Government of Canada is a forward-thinking, effective enabler of businesses creating future-proof, well-paying jobs for Canadians, particularly in the green economy. 

“This is one reason why Volkswagen and PowerCo are excited to work with such an approachable partner offering promising cooperation and engagement at all levels of government.”

Volkswagen’s growth strategy in North America involves the company offering the most comprehensive electric product portfolio in North America. This will include more than 25 battery-electric models by the end of the decade. 

At the same time, strong regional capabilities for electric vehicle (EV) research and development, vehicle assembly, component production and supply relationships are being expanded across the North American continent.

Pablo Di Si, Volkswagen Group of America incoming President and CEO, said “We’re committed to bringing electric mobility to consumers and communities in North America. Today’s agreement between the Volkswagen Group and the Government of Canada will enable us to work closely with local suppliers and expand our capabilities.

“We continue to invest in electrification with plans to launch more than 25 battery-electric vehicles planned by 2030. A broad-based supply of raw materials from across the region will be key to support our ambitious growth plans.”

This follows the recent news that fellow German automaker Mercedes-Benz Group had also signed an MoU with the Government of Canada to explore deeper cooperation across all stages of the electric vehicle supply chain. This ranges from technical development and the extraction of raw materials to production, service life and recycling. 

With both German carmakers working with Canada, shows a huge mutual commitment towards sustainable development and climate protection, and their investments towards a cleaner and greener economy of the future. 

This news continues Volkswagen’s global expansion and collaborations to build more electric vehicles. Earlier in the month, it announced it was expanding its partnership with Mahindra to accelerate the transition to electric vehicles in India.

Ian Osborne
Ian Osborne
Editor-in-Chief at ElectricDrives

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