Volkswagen and Mercedes-Benz recently signed Memorandums of Understanding (MoU) with the Canadian government to secure access to the country's reserves of electric vehicle battery materials such as lithium, cobalt, nickel and graphite.

The deal comes after U.S President Biden pass the Inflation Reduction Act which stipulates that EVs eligible for the full $7,500 federal tax credit will need to be made in North America and feature battery materials sourced from North America. Starting in 2024, at least 40% of the critical minerals in EV batteries must be sourced from North America or other free-trade partners, with the requirement going to 100% by 2029. 
Volkswagen Group told media that its agreement with Canada is designed to shorten its supply chains to its current facilities in the US in order to avoid certain tariffs and tax regulations. A spokesperson for the German automaker said Biden’s latest bill played a key part in the supply agreement, and its dedicated battery business PowerCo will begin ramping up manufacturing in the US with its new “reliable and sustainable supply chains.”
Mercedes-Benz Group is working with fellow automaker Stellantis, to implement eight new battery manufacturing facilities around the globe and is already manufacturing batteries in the US at its plant in Tuscaloosa, Alabama. Mercedes declined comment on its latest supply agreement with Canada or elaborate and how it plans to use the raw battery materials.
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