Germany - Car Country? The exodus begins: Mercedes-Benz, Volkswagen, First Phosphate

Mercedes-Benz prefers to build e-cars in the US

No less than four Mercedes-Benz insiders have revealed to Handelsblatt that the SUV plant in Tuscaloosa is set to undergo significant expansion. From 2026, the electric version of the GLC, a bestseller of the Swabians, is planned to be manufactured there. Until now, this model has come from Germany - according to Handelsblatt, in 2022, 66,000 GLCs were exported to the United States. Mercedes-Benz has yet to make a final decision on the expansion of the factory - investments in Mexico are also under discussion. However, since parallel inquiries are already underway regarding production in the US, this is likely to be a game of poker - companies ultimately go where the best conditions entice.

However, these plans are not good news for Germany as an export location. As the newspaper reports, car exports from Germany have plummeted by 40% since 2016. Since the boom in electromobility is currently necessitating trend-setting investment decisions and economies like the US are tempting with lavish subsidies, the course could be set to Germany's disadvantage.

Volkswagen also lured by billions

Volkswagen has also long been setting its sights on the US. Thanks to lavish subsidies, a new e-car plant is being built in South Carolina, where 200,000 SUVs and pickups are to roll off the production line every year. Subsidies from the Inflation Reduction Act funds amount to about USD 1.3 billion. The example of the Mercedes plant in Aguascalientes, Mexico, shows just how much traction the United States has. Despite lower labor costs, the factory where Mercedes-Benz currently manufactures the GLB could be up for disposal.

First Phosphate takes the first step toward e-car supply chain

While the e-car boom in the US is likely to worry German suppliers, companies along the value chain based in North America can have hopes of even better business. The Canadian company First Phosphate recently announced that it had concluded a letter of intent to support the production of active cathode material from lithium iron phosphate. The total is expected to be up to 40,000 tons of cathode active material annually. Batteries made from lithium iron phosphate, known as LFP cells, are now considered the gold standard in the automotive industry. First Phosphate's partner is American Battery Factory, based in the US state of Utah. A final agreement is to be concluded as soon as the two parties have found another LFP technology partner. Given the developments around e-car factories in the US, this partner could be found soon.

According to First Phosphate CEO John Passalacqua, the phosphate that First Phosphate plans to unearth at its site in Quebec, Canada, is characterized by high quality and can also be mined sustainably. "Our main properties are located a maximum of 145 km from a deepwater port in Saguenay and are close to the city of Saguenay, which also has an airport. Other advantages include good road access and clean and economical energy from hydropower. All these factors ensure that we will be able to extract phosphate for the LFP battery and that we will also be able to do it in a totally environmentally sustainable way," Passalacqua said in the March interview.

While First Phosphate's recent agreement is only a first milestone, given the e-car boom in the US, chances are good that First Phosphate will find more partners to implement its ambitious plans. The attractiveness of the US as a location has been on the rise, not only since the Inflation Reduction Act but also with the interest shown by Mercedes-Benz and Volkswagen. Suppliers from North America are likely to benefit from this development.