Volkswagen and Mercedes secure Canadian battery materials

Mercedes-Benz and Volkswagen have signed agreements with Canada to access nickel, cobalt, and lithium for battery production.

This week, Justin Trudeau and Olaf Scholz are signing MOUs.

VW's agreement aims to shorten supply chains for its U.S. facilities and avoid tariff and tax issues. A person familiar with the agreement said it was partly prompted by the U.S. Inflation Reduction Act signed last week.

Bloomberg says VW's battery business, PowerCo, is ramping up to ensure "reliable and sustainable supply chains."

German Chancellor Olaf Scholz said of the agreements, "I'm very happy that Volkswagen and Mercedes will seal a closer cooperation in this area."

Volkswagen plans to build six battery plants in Europe and one in North America. Volkswagen of America COO Johan De Nysschen said the plant could help ease a battery shortage by supplementing suppliers.

Scholz's Canada trip includes outgoing VW CEO Herbert Diess. Robert Habeck, Germany's economy minister, has joined.

Scholz told Bloomberg that the agreement with Canada will reduce Germany's reliance on Russia for energy and raw materials. He noted that Canada "has similar rich natural resources as Russia – but it's a reliable democracy."