Volkswagen Group, its battery company PowerCo, and the Canadian government have launched a site search for the group’s first gigafactory in North America, Kallanish reports.

The parties signed an addendum to the non-binding MOU inked in August to identify suitable sites for a cell plant in Canada. The new cooperation element complements their previously announced collaboration in the areas of battery value creation, raw material supply chains, and cathode material production.

Canadian innovation, science, and industry minister François-Philippe Champagne said during his visit to Germany last week that the auto industry is vital to the Canadian economy.

“And as the world transitions to a cleaner and more sustainable economy, Canada’s highly-skilled workers will be key in helping to build the green vehicle of the future,” he adds, without mentioning the country’s minerals and natural resources.

Oliver Blume, ceo of VW Group, explains that Canada “is one logical option” for the construction of a North American gigafactory.

“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. This is just the beginning: The EV market in North America is at a turning point, and we’re committed to investing across the entire region to leverage this historic chance for Volkswagen and our customers,” he adds.

As the parties commence site selection, PowerCo also signed an additional agreement with Umicore for the supply of cathode material in Canada. The aim is to secure up to 40 gigawatt-hours/year in 2030 at “competitive prices.” The volume would meet demand from 550,000 all-electric vehicles, and deliveries would start in 2027.

The companies already have a cooperation agreement in place in Europe for cathode materials and precursors for 160 GWh/year capacity, which would correspond to annual production of roughly 2.2 million BEVs. This cooperation is set to be done via a joint company, subject to regulatory approvals.

Umicore said in a separate statement the intended long-term supply agreement would make PowerCo an important customer for its planned battery materials plant in Ontario. The Belgian firm expects to finalise contracts with a number of customers and start construction of the plant in 2023, targeting operations at the end of 2025. The aim is to develop annual capacity to power around 1 million BEVs by the end of the decade.