VW to start a site search for its first North American gigafactory in Canada after signing a non-binding agreement with federal minister François-Philippe Champagne in Germany today

Volkswagen Group has officially set its sights on making Canada the home of its first gigafactory outside Europe, after announcing today that it has signed an agreement with the federal government to begin searching for suitable locations for a battery cell factory in this country.

The agreement comes in the form of an addendum to the memorandum of understanding the automaker signed with the Canadian government in August to work together on areas such as battery value creation, raw material supply chains and cathode material production, with ESG values in practice.

“Canada is one logical option for the construction of a gigafactory in the region of North America,” says Oliver Blume, Volkswagen’s CEO in a press statement. “The country offers high sustainability standards and ideal economic conditions and the government of Canada has already proven to be a strong and reliable partner.”

The site location will be selected based on its characteristics, infrastructure, as well as the availability of sufficient quantities of renewable energy and competitive financial conditions, adds Volkswagen’s AG and chairman of the supervisory board of its battery subsidiary, PowerCo SE, Thomas Schmall.

“Today’s announcement between Canada and VW represents another major step forward, continuing our shared work to grow Canada’s and Germany’s clean transportation sector and meet global and North American demand for zero-emission vehicles,” says François-Philippe Champagne, federal Minister of Innovation, Science and Industry.

Cathode material deal with Umicore

Along with Volkswagen’s commitments to building a gigafactory, the automaker and its battery subsidiary PowerCo SE also signed an MoU agreement to secure cathode materials for future cell production in North America with Belgian-based materials technology company, Umicore.

In September, Volkswagen entered into a $2.9-billion battery parts joint venture with Umicore to produce enough cathode materials and precursor cathode active material for 160 gigawatt-hours of cell capacity, or about 2.2 million all-electric vehicles annually in Europe.

The two companies are now aiming to extend their partnership into Canada.

“The objective is to secure capacities at competitive prices as well as firm delivery agreements for cathode materials and their precursors for the future cell production of PowerCo SE,” reads the press material. “This concerns a volume of up to 40 gigawatt-hours (GWh) per year in 2030, corresponding to about 550,000 all-electric vehicles.”

Earlier this year, Umicore announced plans to begin building a $1.5-billion plant for the production of cathode materials and precursors near Kingston, Ont., in 2023, with deliveries to its partners expected to start in 2027.

“Taking our partnership across the Atlantic would foster Umicore’s and PowerCo’s shared strategic convictions of enabling and accelerating clean mobility on a secure and sustainable local-for-local basis,” says Ralph Kiessling, EVP energy and surface technologies at Umicore. “For Umicore, a long-term cooperation with PowerCo would support our plans to build Canada’s first-of-its-kind precursor and cathode materials facility.”