BASF, Canada in early talks on EV battery production - source

OTTAWA, May 20 (Reuters) - Several companies, including Germany's BASF SE (BASFn.DE), are in preliminary talks about tapping a federal clean tech fund to set up production for electric vehicle batteries in Canada, a government official with knowledge of the discussions said.

The talks are centered on understanding whether the goals of BASF and others fit with the aim of the C$8 billion ($6.6 billion) "Net Zero Accelerator" (NZA) fund, the source said. Canada has set a goal to reach net zero emissions by 2050.

BASF is a key supplier of cathode active materials (CAM) needed for the production of lithium-ion batteries in electric vehicles (EV), and is the world's largest chemicals and plastics producer by sales.

"Canada is an interesting destination for potential production given its access to rising battery cell manufacturers in North America and its access to raw materials that are needed for the production of cathode materials," BASF said in a statement to Reuters.

"BASF currently examines several options in various regions to further expand its production network in this fast growing market for battery materials and to continue to support its customers," it added, without confirming the talks with the Canadian government.

John Power, spokesman for Canada's Industry Minister Francois-Philippe Champagne, said he could not comment on the status of any discussions. The talks are preliminary and are no guarantee of a deal, the source said.

BASF, in partnership with Japan's Toda Kogyo Corp (4100.T), already produces CAM at two locations in North America - Ohio and Michigan - including nickel cobalt aluminum oxide and nickel cobalt manganese oxide.

BASF has been seeking access to battery-grade cobalt and nickel, for instance through partnerships with Russia's Norilsk Nickel (GMKN.MM) and France's Eramet (ERMT.PA).

On Thursday, BASF also unveiled a 51%-49% joint venture with Shanshan (600884.SS) to produce CAM in China, the world's largest car market.


According to market research firm ReportLinker, the global CAM market is expected to grow to $23.3 billion by the end of 2025 from $16.8 billion in 2019, boosted by an expected global boom in electric vehicle sales.

Rich in key materials for EV battery production - including lithium, graphite, cobalt and nickel - Canada is trying to woo battery makers to safeguard the future of its manufacturing heartland in Ontario as the world seeks to cut emissions.

Ontario is geographically close to U.S. automakers in Michigan and Ohio, and General Motors Co (GM.N), Ford Motor Co (F.N) and Stellantis NV (STLA.MI) have all announced plans to make electric vehicles at factories in Ontario.

"We are ensuring we have the policies necessary to attract the electric vehicle and battery supply chains to Canada," Industry Minister Champagne said in a statement.

The "Net Zero Accelerator" "will support job creation and our long-term prosperity, and position Canada as a global leader," he added.

Current EV sector manufacturers in Canada include GreenPower (GPV.V), Lion Electric (LEV.TO), New Flyer, and Nova Bus, which is owned by Sweden's Volvo's (VOLVb.ST).

Other European and Asian players are exploring options for how to enter the Canadian market, including Austrian lithium-ion battery maker Kreisel Electric, which licenses its technology to clients for a fee.

"We are in very concrete talks with a very large player in the bus and trucks industry," said Gernot Friedhuber, who holds a 15% stake in Kreisel Electric with a fellow investor.

"Should the decision be made in our favor, we would build production on site and create value in Canada."

Chinese EV maker BYD Co Ltd (002594.SZ), , which is backed by U.S. investor Warren Buffett and already operates a bus factory in Ontario, said Canada was an "extremely important" market for the Shenzhen-based group.

"Already, BYD is participating in pilot programs in several provinces and the company hopes to expand that presence over the next several years," it said, without providing details.

($1 = 1.2102 Canadian dollars)

Reporting by Steve Scherer in Ottawa and Christoph Steitz in Frankfurt; additional reporting by Ludwig Burger and Patricia Weiss; editing by Jonathan Oatis

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