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VW Group and Canadian Government Team Up To Secure Battery Minerals

Rare earth minerals and other battery materials are shaping up to be very important on the geopolitical stage. As this piece at Quartz points out, China’s grip on the minerals that drive not only clean technologies, but other important things like medical imaging, came to a head for Japan in 2010. China was able to bring Japan to its knees by cutting off supplies. This led Japan to take a very different path on clean technology, and could explain why Japanese automakers are clinging to hydrogen technology when the rest of the world is going with battery-electric vehicles (BEVs, or “full EVs”).

On top of the geopolitical issues is the U.S. response in the latest version of EV subsidies. In the coming years, an electric vehicle battery will need to come from minerals that don’t come from countries that the U.S. government has grown to mistrust, especially China, if they want the vehicle to qualify for tax credits and rebates. This could lead to more vehicles being plugin hybrids (PHEV), but how many credit-eligible BEVs can be built is going to depend a lot on the battery supply from friendly countries.

For those who don’t think PHEVs are a good short- or medium-term answer, there’s good news from a recent Volkswagen press release. Volkswagen Group and the Canadian government recently came to an agreement, known as a “Memorandum of Understanding” (MoU). According to the MoU, both parties will explore options for Canada’s involvement in Volkswagen’s international and regional battery supply chains. PowerCo, which is responsible for managing battery value creation, raw materials supply chains, and cathode material production in North America, among other things, has been playing a vital role thus far and continues to do so throughout these planned proceedings.

The German battery manufacturer is working to prepare for the imminent arrival of Tesla. In a separate report, the Financial Times stated that Porsche had engaged in talks with Daimler about purchasing VIA’s electric vehicle (EV) subsidiary. Porsche SE is responsible for all worldwide Group activities along the battery value chain, ensuring cell supply for Volkswagen’s e-mobility push. The rapidly developing global battery cell business is one of Volkswagen’s NEW AUTO objectives, which seeks to make it the world leader in more ecologically friendly and software-driven mobility.

The goal is to rapidly establish highly standardized cell production capacities of 240 gigawatts per year in Europe alone. In addition, a specialized gigafactory will be built in North America. Sites are being investigated for possible manufacturing locations.

“I welcome that Volkswagen and Canada have signed a Memorandum of Understanding on battery value creation today,” said Olaf Scholz, Chancellor of the Federal Republic of Germany. “This is excellent proof that the cooperation with our close friends and allies in Canada is further deepening also in the context of raw material security and may encourage other companies to follow.”

In order to develop more sustainable battery production, both parties intend to boost cooperation based on recognized ESG (Environment, Social, Governance) criteria between PowerCo and the Canadian mining sector. The Canadian mining sector 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 with a key focus on supplying critical raw materials such as lithium, nickel, and cobalt.

Both Volkswagen and PowerCo view joint ventures with Canadian suppliers as an excellent way to increase cathode material production. With its manageable raw material resources, superior infrastructure, advanced automotive industry knowledge, and highly skilled workforce, Canada is prepared to be a part of these projects.

“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,” said The Honourable François-Philippe Champagne, Canada’s Minister of Innovation, Science and Industry. “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 Group says it plans to offer 25 battery-electric models by the end of the decade in North America. Furthermore, it is expanding its regional capabilities for EV research and development, vehicle assembly, component production, and supply relationships across North America.

“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,” said Pablo Di Si, incoming President and CEO, Volkswagen Group of America, Inc. “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.”

A Move In The Right Direction For The U.S. & Europe

It’s important to note from the above quotes that the battery supply isn’t just for Volkswagen of America. European factories are also going to rely on battery minerals from Canadian sources. This means that the help that the United States market will get from this source will be diluted by a good chunk (if not most) of the minerals and completed batteries going to Germany and other VW plants in Europe to build VW cars.

At the same time, this is still a big move in the right direction, even for EV buyers in the States. Any friendly-country source of battery minerals is going to supply other countries that don’t want to rely on China for their futures, and accept the coercive international policies that would accompany with letting the Communist Party get you by the shorts.

Perhaps most importantly, this is going to do a small part in helping democratic countries (and not the weird Orwellian definition of “democracy” we’re seeing from the CCP/CPC/whatever) be able to build BEVs, build decent PHEVs (with useful EV range), and avoid having to rely on wasteful and inefficient hydrogen technology.

Much more does need to be done, though. The United States and European countries need to do what they can to develop many more geopolitically safe sources for battery minerals.

Featured image provided by Volkswagen.

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Jennifer Sensiba is a long time efficient vehicle enthusiast, writer, and photographer. She grew up around a transmission shop, and has been experimenting with vehicle efficiency since she was 16 and drove a Pontiac Fiero. She likes to get off the beaten path in her "Bolt EAV" and any other EVs she can get behind the wheel or handlebars of with her wife and kids. You can find her on Twitter here, Facebook here, and YouTube here.


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