Dive Brief:

• Volkswagen and Mercedes-Benz signed agreements with the government of Canada on Tuesday to secure access to lithium, cobalt and other raw materials used in electric vehicle batteries.
• Volkswagen will ramp up efforts to source raw materials in Canada, according to a memorandum of understanding. The agreement will “offer Canadian suppliers an opportunity to act as raw material suppliers, refiners and processors”  for the automaker, the company said in a statement. 
• Mercedes-Benz will also explore opportunities for mining, refining and cell manufacturing in the country, as part of a separate memorandum. As part of the agreement, the company also intends to sign a deal with Canada-based Rock Tech Lithium for up to 10,000 tonnes of lithium hydroxide a year.

Dive Insight:

Automakers are under growing pressure to bring EV component sourcing and production to North America. The U.S. Inflation Reduction Act signed earlier this month requires components be primarily sourced and produced in North America or allied countries if vehicles are to qualify for consumer purchasing incentives.

Canada is among the largest Class 1 battery-grade nickel producers, according to the International Energy Association. The country is additionally a significant producer of cobalt and has a large reserve of lithium, the U.S. Geological Service said in annual commodity reports. 

"Mercedes-Benz is looking to open new ways to responsibly acquire raw materials to rapidly scale up electric vehicle production,” said Chief Technology Officer Markus Schaefer, who oversees procurement for the automaker. “Securing direct access to new primary and sustainable sources of raw materials is a vital step down this road.”

Volkswagen also said there is significant opportunity to secure needed minerals in Canada, noting that it plans to establish a liasion office in the country focused on cooperative efforts to boost raw material supply. The automaker is examining potential sites to build a dedicated gigafactory for cell production in North America. 

“A broad-based supply of raw materials from across the region will be key to support our ambitious growth plans,” said Pablo Di Si, incoming president and CEO of Volkswagen Group of America.

The agreements with Mercedes-Benz and Volkswagen also come as Canada finalizes a Critical Minerals Strategy to increase the supply and processing of lithium, graphite, nickel, cobalt, copper and rare-earth elements. The strategy is backed by nearly C$4 billion (approximately $3.08 billion) from the country’s 2022 budget, according to a government report.

“Simply put, there is no energy transition without critical minerals, and this is why critical mineral supply chain resilience is an increasing priority for advanced economies,” wrote Jonathan Wilkinson, Minister of Natural Resources, in the report.