The Inflation Reduction Act requirement for credits and rebates for North American sourced materials appears to have accelerated Volkswagen and Mercedes-Benz partnerships for Canadian-sourced battery materials.
Volkswagen AG and the Government of Canada aim to promote e-mobility in the country and to explore opportunities across Canada’s automotive and battery supply chain. This was agreed in a “Memorandum of Understanding” (MoU) signed today in Toronto by Volkswagen CEO Herbert Diess and Canada’s Minister of Innovation, Science, and Industry, François-Philippe Champagne, in the presence of German Chancellor Olaf Scholz and Canadian Prime Minister Justin Trudeau. Both parties will investigate opportunities for Canada to contribute to Volkswagen’s global and regional battery supply chains. PowerCo, the newly founded battery company of the Group, has a central role in these efforts and will drive forward the planned cooperation in the fields of battery value creation, raw materials supply chains and cathode material production in the North American region.
Rock Tech Lithium Inc (TSXV: RCK) (OTCQX: RCKTF) (FWB: RJIB) (WKN: A1XF0V) (“Rock Tech”) and Mercedes-Benz AG (“Mercedes-Benz”) are pleased to announce that they are about to enter into an agreement which provides for a strategic partnership to produce high-quality lithium hydroxide for the automaker and its battery suppliers. Under the intended binding agreement, Rock Tech has agreed to deliver up to 10,000 tonnes per year of its planned production to the premium manufacturer and its partners starting in 2026. The two companies made the announcement on Tuesday during a visit to Canada by a business delegation from Germany led by Chancellor Olaf Scholz..
Mercedes-Benz wants to become fully electric by the end of the decade. From 2025 onwards the luxury carmaker plans that all newly launched vehicle architectures will be all electric. To help make this a reality, Mercedes-Benz intends to enter a strategic partnership with Rock Tech, lasting for at least five years and an option to prolong.
More Volkswagen Details
PowerCo SE is responsible for all global Group activities along the battery value chain, securing battery cell supply for Volkswagen’s e-mobility push. The rapidly growing global battery cell business is a key pillar of Volkswagen’s NEW AUTO strategy, which aims to make Volkswagen the leading provider of sustainable and software-driven mobility. The plan is to quickly build up highly standardized cell production capacities totaling 240 gigawatt hours per year in Europe alone. In addition, there are plans to establish a dedicated gigafactory in North America. Possible production sites are currently being examined.
Olaf Scholz, Chancellor of the Federal Republic of Germany: “I welcome that Volkswagen and Canada have signed a Memorandum of Understanding on battery value creation today. 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.”
The Honourable François-Philippe Champagne, Minister of Innovation, Science and Industry, said: “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. 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.”
Dr. Herbert Diess, CEO of Volkswagen Group: “Volkswagen has been vigorously pushing the transformation to e-mobility, recognizing the industry‘s responsibility in the global battle against climate change. The Group today not only offers the broadest range of electric models to customers but is also rolling out an ambitious battery and charging strategy. Working hand in hand with governments around the world is an absolute prerequisite to meet our climate goals and I want to thank the Canadian government for their support. The supply of battery raw materials and the production of precursor and cathode materials with a low carbon footprint will allow for a fast and sustainable ramp-up of battery capacity — a key lever for our growth strategy in North America.“
Thomas Schmall, Volkswagen Group Board of Management member for Technology: “As an automaker, we see compliance with stringent sustainability criteria as a top priority. For us, the availability of power from renewable sources and a raw materials sector with mines supplying materials conforming to the globally recognized environmental and social standards are crucially important. That is why Canada is an ideal partner for our e-mobility and battery strategy.”
Joint statement with respect to sustainable battery manufacturing and reliable raw material supply
For the development of sustainable battery production, both parties intend to boost cooperation based on recognized ESG (Environment, Social, Governance) criteria between PowerCo and the Canadian mining sector, which 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. A key focus of cooperation is the supply of critical raw materials such as lithium, nickel and cobalt.
Both parties see significant prospects for Volkswagen and PowerCo to ramp up cathode material production together with partners and to offer Canadian suppliers an opportunity to act as raw material suppliers, refiners and processors.
With its vast raw material resources, good infrastructure and highly developed automotive industry with considerable production expertise and highly qualified workforce, Canada sees itself outstandingly well-positioned for joint projects.
Schmall commented: “The Government of Canada is a forward-thinking, effective enabler of businesses creating future-proof, well-paying jobs for Canadians, particularly in the green economy. This is one reason why Volkswagen and PowerCo are excited to work with such an approachable partner offering promising cooperation and engagement at all levels of government.”
Next Step of Growth Strategy for North America
The Volkswagen Group brands plan to offer the most comprehensive electric product portfolio in North America with more than 25 battery-electric models by the end of the decade; at the same time, strong regional capabilities for EV research and development, vehicle assembly, component production and supply relationships are being expanded across the North American continent.
“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.”
More Mercedes-Benz Details
From 2026 onwards, it is envisaged that Rock Tech contributes up to 10,000 tonnes of lithium hydroxide annually to Mercedes-Benz and its battery partners, starting with a qualification period and after quality and sustainability benchmarks have been met. This battery-grade lithium product is an essential component of high-performance vehicle batteries. The Canadian-German Rock Tech expects to become a central implementation partner for the automaker and its all electric and carbon neutral strategies.
With the envisaged strategic partnership, both companies aim to ensure that the amount of battery-grade lithium meets Mercedes-Benz’s growing demand in order to scale up electric vehicle production. Rock Tech is currently developing its first converter project in Guben, eastern Germany. So far, no other refinery of its kind exists in Europe. Rock Tech aims to close this gap in supply of lithium and to make regional supply chains more resilient by refining spodumene into high quality lithium hydroxide at this converter by the end of 2024. This would create a short supply chain in Mercedes-Benz’s origin and is expected to further strengthen the partnership.
“With the envisaged agreement, we intend to provide Mercedes-Benz not only with high-quality lithium hydroxide, but also to establish a strategic partnership that is expected to set new standards in sustainable supply chains. We are very pleased to have found a partner that intends to take important steps with us towards a more resilient and sustainable lithium supply chain to deliver an important part of their strategy and of the e-mobility transformation”, says Markus Bruegmann, Chief Executive Officer of Rock Tech Lithium.
“Mercedes-Benz plans to go all electric by the end of this decade, wherever market conditions allow. To scale up our electric vehicle production, access to raw materials is needed to improve the resilience and sustainability of the electric vehicle supply chain. With the Rock Tech partnership we intend to take a direct sourcing approach to secure the lithium supply for Mercedes-Benz battery production”, says Markus Schaefer, Member of the Board of Management of Mercedes-Benz Group AG, Chief Technology Officer, responsible for Research & Development and Procurement.
Additionally, Rock Tech also intends to operate its own mine in Georgia Lake, Canada, to contribute to wider and growing lithium demand in the northern hemisphere. With the emergence of new sources of raw materials within the G7 community, Canada in particular is becoming increasingly important for resilient supply chains. Rock Tech exemplifies how cooperation between Canada and Germany can be realized. This is one of the reasons why Mercedes-Benz and Rock Tech announced the envisaged partnership during a business delegation’s trip to Canada on Tuesday in Toronto, with reference to Memorandum of Understanding entered into by Mercedes-Benz and the Government of Canada to strengthen cooperation across the electric vehicle value chain.
A shared understanding and focus on reliability, resilience, and sustainability in the supply chains in Europe and North America creates a strong basis for the planned strategic partnership between Rock Tech and Mercedes-Benz. Rock Tech’s sourcing options and its own mining project in Canada are expected to meet or exceed the standards of the Initiative for Responsible Mining Assurances (IRMA), whose criteria includes both human rights aspects and the environmentally sustainable mining of raw materials, among others. In addition, Rock Tech is investigating new methods and technologies aimed at the carbon neutral industrial production of lithium hydroxide and new zero waste production methods.