Volkswagen Group has sealed an settlement with Canada to safe entry to uncooked supplies similar to nickel, cobalt and lithium for car and battery manufacturing, individuals acquainted with the accord advised Bloomberg.

The memorandum of understanding might be signed throughout German Chancellor Olaf Scholz’s present journey to Canada and is designed to shorten provide chains for VW’s amenities within the U.S. and keep away from difficulties linked to tariffs and tax laws, stated one of many individuals, who requested to not be recognized discussing confidential info. The transfer has partly been prompted by new guidelines that President Joe Biden signed into regulation final week, the particular person added.

Volkswagen and Canadian authorities leaders have scheduled a digital press convention for Tuesday “to announce an settlement to collectively advance electrical mobility within the nation.”

Spokespeople for VW didn’t instantly reply to a request for remark when contacted by Bloomberg.

The Biden administration’s Inflation Discount Act permits customers to proceed getting as a lot as US$7,500 in tax credit for EVs if producers meet new content material necessities. Minerals have to be extracted from or processed in international locations the U.S. has a free commerce settlement with, and a big proportion of battery elements have to be manufactured or assembled in North America.

Automakers similar to VW and Stellantis have launched into bold plans to make batteries. VW is planning six amenities in Europe alone, whereas Mercedes-Benz Group has joined Stellantis in a 7 billion-euro (C$9.1 billion) battery enterprise and is pursuing a complete of eight amenities globally.

A enterprise delegation together with VW Chief Govt Officer Herbert Diess is touring with Scholz on his Canada journey, his first there since he took workplace on the finish of final yr.

Scholz will maintain a number of conferences with Canadian Prime Minister Justin Trudeau because the Group of Seven and NATO companions transfer to deepen cooperation in areas together with power and safety.

The German chief, who can be accompanied by Financial system Minister Robert Habeck, desires to enlist Canada to assist Europe’s greatest economic system cut back its reliance on Russia for power and uncooked supplies.

Canada “has comparable wealthy pure sources as Russia — with the distinction that it’s a dependable democracy,” Scholz advised reporters in the course of the flight over.

“This opens up new fields of cooperation,” he added. “We wish to cooperate carefully, particularly on the subject of constructing a hydrogen economic system.”