Canadian Industrial Policy Actively, Successfully Pursuing EV Climate and Economic Benefits with New Mercedes, VW MOUs

Canada with abundant material resources, an advanced automotive industry with extensive production and a qualified workforce, is ideally positioned to thrive in the inevitable EV vehicle industries. These can only grow as the devastating effects of climate change from fossil-fuel use continues to increase. The Canadian Federal government not only recognizes this, but is actively pursuing an industrial policy that is beneficial for its constituents and the environment.

Free market ideologues, many of them backed by fossil-fuel providers, disdain such progressive thinking and are positively scornful of a federally directed industrial policy such as the tiny one established in the Biden Administration’s Inflation Reduction Act. Not a single Republican voted for it.

This, arguably, is the US’ first significant climate law since Congressional hearings were conducted on the environment 40 years ago. It’s also significant change in political philosophy toward rational thinking over ideology with broader implications – if it carries over into future policies.

As AutoInformed perceives it, this policy change soundly reasons that the US shouldn’t let the mis-leadingly labeled free-market operate when it moves, say, all semi-conductor production offshore to areas that are hostile to US interests or mock and abandon trade agreements or vital international alliances, ignores behavioral economics, among other absurdities that damage our economies, our lives and ethics. The investments made will make American industrial output greater thereby cutting inflation.*

Yesterday, Prime Minister Trudeau and German Chancellor Scholz with their delegations discussed expanding Canada and Germany’s deep and long-standing partnership in areas of common interest, including trade and investment, clean energy and clean technology, and global climate leadership. The leaders and ministers expressed their resolve to address the impacts of climate change, including the importance of expanding the international coverage of carbon pricing in the lead-up to COP27, according to an official government readout of the meeting.

Today, Mercedes-Benz Group AG and the Government of Canada signed a Memorandum of Understanding (MoU) to explore deeper cooperation across all stages of the automotive value chain – from technical development and the extraction of raw materials to production, service life and recycling. Volkswagen Group  also signed the agreement with government on battery value creation and raw material security.

Common to both global automaker giants is Rock Tech Lithium with its operations in Canada and Germany that aim to supply the automotive industry with “made in Germany” lithium hydroxide. Starting in 2024, Rock Tech intends to commission Europe’s first lithium converter with a production capacity of 24,000 tons per year – equal to the volume needed to supply ~500,000 electric cars with lithium-ion batteries.

Rock Tech owns the Georgia Lake Project in Ontario, Canada. The company has set itself the goal of creating the world’s first closed-loop for lithium, potentially decreasing the raw material problem potholes and fissures on the road to clean mobility. As early as 2030, around 50% of the raw materials used are expected to come from the recycling of batteries.

Mercedes-Benz

“Mercedes-Benz is looking to open new ways to responsibly acquire raw materials to rapidly scale up electric vehicle production. Securing direct access to new primary and sustainable sources of raw materials is a vital step down this road. With Canada, Mercedes-Benz has a strong and capable partner to break new ground for a new era of sustainable transformation in the automotive industry,” said Markus Schaefer, Member of the Board of Management of Mercedes-Benz Group AG, Chief Technology Officer, responsible for Research & Development and Procurement.

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,” said Herbert Diess, CEO of Volkswagen Group.

*The Inflation Reduction Act is the most aggressive action on tackling the climate crisis in American history.The bill would spends $370 billion on climate and energy security measures. It uses increased or new tax credits to stimulate clean energy generation and efficiency, electrification, as well as the extensive adoption of electric vehicles.

  • It will help  American workers and create good-paying, union jobs across the country.
  • For the first time ever, the Inflation Reduction Act establishes Make it in America provisions for the use of American-made equipment for clean energy production.
  • The law provides expanded clean energy tax credits for wind, solar, nuclear, clean hydrogen, clean fuels, and carbon capture, including bonus credits for businesses that pay workers a prevailing wage and use registered apprenticeship programs.
  • It’ll lower the deficit and ask the ultra-wealthy and corporations to pay their fair share. And no one making under $400,000 per year will pay a penny more in taxes.”

In the messy, money-dominated world of US party politics, part of the bill also supports fossil fuels by protecting federal drilling auctions and underwriting upgrades of coal and gas capacity.

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