Monday, February 6, 2023
News US-Made Volkswagen EV Batteries Will Have Canadian Sourced Materials

US-Made Volkswagen EV Batteries Will Have Canadian Sourced Materials

Volkswagen will be able to benefit from a tariff-free supply of lithium, nickel and cobalt due to a new deal with Canada.

  • The German Chancellor will sign a deal with Canada to have better access to battery materials

  • This deal will secure the automaker’s access to cobalt, nickel, and lithium to be used in batteries

  • This is due to both the new tax laws passed by the US government and by the Russia-Ukraine war

Volkswagen will sign a deal with Canada later this week in order to secure a supply of materials to be used in EV batteries made in the United States.

This move was prompted by the new laws concerning EV tax credits that have been passed by the US government.

Indeed, the new laws mean that the only electric vehicles that are still eligible for the $7,500 tax credit are those that are built in the US and whose batteries are made of minerals sourced from a country with which the US has a free-trade agreement.

This means that EVs made by Volkswagen in Europe are not eligible for this credit anymore, which makes them less competitive than some other models.

The deal with Canada will allow the automaker to benefit from tariff-free minerals to build its batteries, which could make the electric vehicles made in its Chattanooga factory eligible again, such as the ID.4 which has recently begun to roll off the line there.

Volkswagen says another reason for the Canadian deal is the war between Russia and Ukraine. Indeed, Russia is a major supplier of minerals currently used for EV batteries in Europe.

Understandably, many automakers want to reduce their dependency on Russia by seeking other sources of energy and natural resources.

Since Canada benefits from many of the same resources, it is an ideal candidate to supply automakers with cobalt, lithium, and nickel, among other minerals.

Volkswagen is not the only company to invest massively into battery production since Stellantis and Mercedes-Benz will work together to build eight new battery plants around the world during the current decade, for an investment of 7 billion euros.

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