VW confirms looking in Canada to build first North America cell plant

FILE PHOTO: A Volkswagen logo

By Jan Schwartz

BERLIN (Reuters) -Volkswagen has begun searching for a site for the German carmaker's first battery cell factory in North America, its CEO announced on Thursday.

Confirming an earlier Reuters story, Volkswagen CEO Oliver Blume and Canadian industry minister Francois-Philippe Champagne signed an addendum to their existing memorandum of understanding from August, agreeing to identify suitable sites for the planned cell plant.

Blume said that battery technology was key for the company's strategy and that it was committed to investing in North America.

"Canada is one logical option for the construction of a gigafactory in the region of North America,” he said, adding it offered ideal economic conditions and high sustainability standards.

Such a plant would be Volkswagen's first gigafactory outside Europe.

Volkswagen's battery subsidiary Powerco also announced it was extending a deal to cooperate with Belgium's Umicore on shipping cathode material to Canada.

The German auto giant said it was a long-term strategic partnership geared toward future cell production in North America.

In the August memorandum of understanding, Volkswagen and mineral-rich Canada agreed to intensify efforts to secure access to lithium, nickel and cobalt.

In September, Volkswagen and Umicore announced a $2.9 billion battery parts joint venture to supply PowerCo's European battery cell factories with key materials from 2025 onwards.

Europe's carmakers have pushed to secure stakes in battery production on the continent, but the industry there is still in its infancy.

The United States is also trying to attract investments in green technology such as electric-powered vehicles and battery production with its Inflation Reduction Act.

The European Union has taken issue with the $430 billion package, which makes tax breaks conditional on U.S-manufactured content, due to concerns of unfair competition.

(Reporting by Jan Schwartz; Writing by Rachel More and Madeline Chambers; Editing by Miranda Murray and Lisa Shumaker)