Volkswagen AG signed an agreement to begin searching for a battery cell factory site in Canada as it plans a “rapid expansion to North America” of its electric vehicle battery business.

Canadian Industry Minister François-Philippe Champagne signed the document with Volkswagen on Thursday during his visit to Germany.

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The agreement -- described as an addendum to a memorandum of understanding signed earlier this year -- means that Volkswagen’s battery unit, known as PowerCo, has Canada on its shortlist for a factory, according to a news release. 

“We will not only consider site characteristics and infrastructure but also, and especially, the availability of adequate quantities of energy from renewable sources and competitive financial conditions,” Thomas Schmall, chair of PowerCo’s supervisory board, said in the release. Ontario and Quebec, Canada’s two largest provinces, have largely clean power generation that includes significant hydroelectric capacity.  

“PowerCo will conduct intensive negotiations with all parties concerned in the near future with a view to identifying the most competitive site,” he said.

The agreement also includes a pledge by PowerCo and Umicore to investigate a strategic supply agreement on cathode material for North America.

This summer, Umicore announced a $1.5 billion (US$1.1 billion) cathode and precursor materials manufacturing plant in Ontario, with operations planned to start in 2025.