VW And Mercedes Benz Team Up With Canadian Battery Material Suppliers To Secure Supply

JAKARTA - German car manufacturers Volkswagen and Mercedes-Benz reached a battery materials cooperation agreement with mineral-rich Canada on Tuesday, August 23. It is their efforts to intensify efforts to secure access to lithium, nickel and cobalt.

The move comes as the automakers roll out their electric vehicle expansion strategy globally in a bid to challenge sector leader Tesla Inc. These strategies rely on an adequate supply of vital battery material.

No financial details were disclosed for the memorandum of understanding (MoU) agreement, which was signed in Canada during the visit of German Chancellor Olaf Scholz and a delegation of German company representatives.

"The supply of battery feedstocks and the production of precursor and cathode materials with a low carbon footprint will enable this rapid and sustainable increase in battery capacity, which is a key lever for our growth strategy in North America," said Volkswagen Chief Executive Herbert Diess.

Volkswagen is now targeting to build, with partners, six large battery cell plants in Europe by 2030 with a capacity of about 240 gigawatt-hours. They also want a specialty plant in North America that is currently scouting and inspecting potential locations.

"VW is targeting an initial capacity of 20 gigawatt-hours at its North American plant," said Thomas Schmall, Volkswagen AG board member and head of the auto battery unit, Power Co.

At a media briefing last Tuesday, Schmall said the company aims to announce plant locations in North America and potential mining and refining partners by the end of this year.

"Everything in our planned electric vehicle launch hinges on battery supply," said Schmall.

Pablo Di Si, presidential candidate and CEO of VW Group of America, said the US automaker's plant in Chattanooga, Tennessee, is aiming to build 90,000 electric cars next year. He also added that VW for the new ID4 variant is expected to qualify as an eco-car and be eligible for a US$7,500 tax break in the US, as set out under the new Inflation Reduction Act.

Mercedes-Benz, meanwhile, is gearing up for a fully electric car type by the end of the decade, wherever market conditions permit. Recently they reached an agreement with CATL of China to ensure the supply of battery cells in Europe.

As part of the MoU, Mercedes-Benz will explore a strategic partnership with Rock Tech Lithium in which the Canadian company will supply the German automaker and its battery partners with up to 10,000 tonnes of lithium hydroxide per year from 2026.

Volkswagen said it could become a shareholder in a local mining company to ensure it ranks first in terms of battery feedstock supplies.