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Tuesday Ticker: Volkswagen to source battery materials from Canada; Rivian cancels R1T Explore model

Toronto, Ontario ⁠— In this week’s automotive economics news: Volkswagen makes plans on an agreement to source nickel, cobalt and other raw materials from Canadian soil; Ford announces plans to cut 3,000 employees and Rivian cancels the entry-level version of its R1T truck.

Volkswagen goes metal

Volkswagen has sealed an agreement with Canada that will see the OEM access raw materials for vehicle and battery production, according to a report from Bloomberg. 

The memorandum of understanding will be signed during German Chancellor Olaf Scholz’s trip to Canada. It is designed to shorten supply chains for VW’s U.S. facilities and to avoid difficulties linked to tariffs and tax regulations, according to someone familiar with the matter.

The move was partly prompted by new rules signed by U.S. President Joe Biden last week, the source told Bloomberg. The Biden administration’s Inflation Reduction Act allows consumers to continue getting as much as US$7,500 in tax credits for EVs if manufacturers meet new content requirements stating minerals must be extracted from or processed in countries the U.S. has a free trade agreement with.

The Canadian Government will hold a virtual press conference with Volkswagen on Tuesday, “to announce an agreement to jointly advance electric mobility in the country.” 

Refashioning at Ford

Ford is cutting 3,000 jobs globally, according to a letter sent to employees on Monday.

The automaker is nixing 2,000 salaried positions and a further 1,000 agency jobs, according to the letter obtained by Automotive News. Affected employees are in the U.S., Canada and India.

The company said that, in addition to eliminating roles, it is focused on reorganizing and simplifying functions within the organization.

“Building this future requires changing and reshaping virtually all aspects of the way we have operated for more than a century,” wrote Jim Farley, CEO of Ford, in the automotive’s letter to employees. “It requires focus, clarity and speed. And, as we have discussed in more recent months, it means redeploying resources and addressing our cost structure.”

Ford shares fell about five percent following the news, closing at 15.12 per share at Monday’s close.

Explore no more 

Rivian has cancelled the entry-level versions of its R1T electric truck and R1S electric SUV, informing its customers of the decision via email last week.

The electric automaker is cancelling its “Explore” trim level for the R1T model, which has a starting price of US$67,500. The automaker’s lowest-cost electric pickup is now the “Adventure” trim option, which carries a US$73,000 price tag.

Customers with existing orders can either upgrade to a more expensive trim level or cancel their pre-orders.

Customers were left “totally enraged” by the announcement, one owner wrote on the Rivian Owners Forum. Similar frustrations were felt last March when Rivian increased the estimated prices of its vehicles by up to 20 percent, meaning some pre-holders would pay between $10,000 and $20,000 more for their vehicles.

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