By Michael Elkins
According to recent reports, Volkswagen (ETR:VOWG) and Mercedes-Benz Group (ETR:MBGn) will sign a memorandum of understanding with Canada on Tuesday to secure supplies of nickel, cobalt, and lithium used in battery production. The memorandum will be signed by German Chancellor Olaf Scholz and Canadian Prime Minister Justin Trudeau.
Chairman of the Board of Management of Volkswagen Group Components, Thomas Schmall said that Canada has virtually all the raw materials required to produce batteries.
"We are not opening any mines of our own, but we want to acquire stakes in Canadian mines and mine operators," — Thomas Schmall.
VW's agreement aims to shorten its supply chains in the US and benefit from tax incentives. The new U.S. tax rules place tougher restrictions on where materials and vehicle manufacturing can be done. The majority of the components for the battery need to be manufactured or assembled in North America.
Volkswagen COO, Johan De Nysschen said in June that” VW is also considering setting up an in-house battery cell manufacturing operation in North America.”
The goal, according to De Nysschen, is to ease a possible battery shortage from suppliers with its own supply. However, nothing has been decided for sure quite yet. The company’s board is still considering the decision.
As for why Volkswagen chose Canada, Scholz said Canada “has similar rich natural resources as Russia – with the difference that it is a reliable democracy.”