Volkswagen is looking to Canada to strike a deal for its next step toward electric vehicles.
Key details
The German automaker is planning to invest in Canadian mines and mine operators and has been speaking with the Canadian government to make it all happen.
The mining operations provide key resources for the manufacturing of batteries for electric vehicles (EVs).
This Canadian deal would help Volkswagen gain access to crucial materials needed for EV battery production such as nickel cobalt and lithium. It also would allow the vehicle to pass under the new amendment of the Inflation Reduction Act.
The new bill has two goals: to make EVs affordable and to bring more of the manufacturing to the U.S. The bill says that all EVs that don’t finish production in the U.S., Mexico, or Canada will not qualify for the tax credit.
Why it’s news
The bill will pump billions of dollars into EV manufacturing, speeding up the process for carmakers. It will also remove the cap on how many cars can qualify for the $7,500 tax credit that was granted to EV buyers years ago.
Previously the tax credit expired after a carmaker sold 200,000 cars. It also provides a smaller, $4,000 tax credit for the purchase of second-hand EVs. So this new deal within Canada will ensure Vokswagen’s EVs will qualify for the tax credit.
Backing up a bit
There has been a significant shift toward EVs over the last year, with 5% of new cars purchased in the U.S. over the last year being electric. That’s considered a tipping point that suggests that 25% of car sales will be electric by 2025.
More than half of car buyers worldwide want an EV. The latest EY Mobility Consumer Index shows that 52% of people looking to buy a car want to buy an EV. This is the first time the number has exceeded 50%, representing a rise of 11 percentage points since last year.
The added incentives and subsidies from the government will only add momentum to the trend’s growth.