On Thursday, at the company’s leadership convention in Wolfsburg, Germany, Blume signaled that VW would look for possible locations in Canada to build a mobile battery production plant.
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“Canada is a logical choice for building a giga-plant in the North American region,” he said. “The country offers the best sustainability criteria and ideal economic conditions, and the Government of Canada has already proven to be a strong and reliable partner.
But the financing, the implications of the announcement for the country’s nascent electric vehicle economy are up in the air. Thursday’s announcement came as an addition to a Memorandum of Understanding (MOU) signed by VW and Canada in August, in which the two sides agreed to cooperate on building a “sustainable” supply chain for battery electric vehicles.
Skeptics say the announcement shouldn’t be important, but optimists say VW, which continually competes with Toyota Motor Corp. to take the crown of the world’s largest automaker, and is as committed to the electric vehicle transition as any other automaker. They have simply said nothing at all.
“As a publicly traded company, they wouldn’t have signed this memorandum of understanding, I guarantee you, if it wasn’t a genuine effort,” said Flavio Volpe, president of the Auto Parts Manufacturers Association, an auto parts industry group. “You don’t tell the market you’re on sites in Canada if it’s optimistic, I mean there’s no benefit. “
Still, Volpe said there’s a political detail to the situation that can’t be ignored: VW signed the original memorandum of understanding in August as German Chancellor Olaf Scholz was visiting Canada in search of a source of liquefied herbal fuel that could help it finish. Although it did not start with a new source of LNG, it signed an agreement with Canada to jointly explore the production of green hydrogen for export to Germany. And a few weeks earlier, Foreign Minister Mélanie Joly agreed to return repaired turbines to Canada for use in a main Russian fuel pipeline supplying Germany.
The return of the turbine provoked strong objections from Ukraine and required an exemption from Russian sanctions. However, the situation has shown that Germany sees Canada as a potential energy partner.
Volpe said the breakthroughs are all symptoms of how geopolitics, the transition of power and the resolve to build a battery-electric vehicle supply chain have changed the dynamics of the auto industry and investment in tactics has been noticed in years, if decades.
Canada is poised to take advantage of this shift and is positioning itself as a raw materials country, with a more efficient mining permit procedure than the United States.
The strength of the country in generation is also a point of promotion. Ontario, in particular, has one of North America’s largest tech ecosystems, which experts say is adapting to something bigger as automakers are integrating computers and software into vehicles, hoping that cars will eventually drive automatically.
To date, Canada has spent billions of dollars to attract automakers, with increasing results. The European company Stellantis N. V. agreed to build a battery plant in Windsor, Ontario, while Umicore plans to produce battery fabric in Kingston, Ontario. BASF SE plans to produce battery fabrics in Bécancour, Quebec, like General Motors Co. , in partnership with South Korea’s POSCO Chemical.
The influx of investments into Canada marks a shift from previous years, when automakers typically pulled investments out of the country, prompting a desire to move to lower-cost jurisdictions.
Some auto industry players, and Volpe add, cite the December 2019 Throne Speech, a time after Canada committed to net zero emissions by 2050, as a turning point for the Canadian auto industry.
Momentum in Canada’s automotive sector has only grown since then, as Industry Minister Francois-Philippe Champagne and his counterparts in Quebec and Ontario, plus Ontario’s Minister of Economic Development, Vic Fedeli, have traveled around the world courting automakers and promising them billions of dollars to build. Production services throughout the country.
The sector gained another boost earlier this year when the U. S. The U. S. government passed the Inflation Reduction Act, which includes incentives for customers of electric cars produced at U. S. U. S. raw materials plants.
Will VW build a battery factory in Canada or is it, as some skeptics would say, a political stance?
“From what I understand, it’s also one of other possible options,” said David Adams, president of Global Automakers of Canada, an organization that counts VW among its members. “But it’s all positive at the end of the day. “
Adams said VW, a state-owned company, would make an accurate calculation of prices and opportunities before making a decision.
Volpe said there was an explanation for why the company’s intentions were sincere. VW already buys piles of millions of dollars worth of car portions from Canadian companies, and the fact that it’s looking for places in Canada means it’s serious, Volpe said. While nothing comes of the announcement, he said other automakers might be forced to consider building here.
According to their estimates, automakers want to build several more battery plants in North America to serve the market here, but the window of action is narrowing.
VW’s announcement Thursday included images of Champagne signing the memorandum of understanding with Blume. But Volpe argued that the time has come, as automakers where to build their supply chains in North America, for politicians to vigorously attract more corporations and incentivize them.
Champagne’s efforts are already paying off for Canada in new investments in its automotive sector, Volpe said.
“It’s in a series of drinks,” he said of champagne.
• Email: gfriedman@postmedia. com | Twitter: Gabe Friedz
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