Germany and Canada forge closer collaboration for automotive industry

The agreement aims to strategically expand industrial collaboration, particularly in sectoral development, the expansion of bilateral automotive trade, and the advancement of battery and hydrogen mobility, as stated by the German Federal Ministry for Economic Affairs and Climate Action. Additionally, dialogue between companies, research institutions, and industry associations in both countries is set to intensify. To facilitate this, a ‘Joint Cooperation Group on Automotive and Mobility’ will be established.

The declared objective is to “expand bilateral industrial cooperation in strategic sectors—in particular, auto and battery manufacturing and critical minerals.” The declaration underscores the strategic importance of the automotive and mobility sectors for economic security, resilience, and growth in both countries. The partnership does not start from scratch: German automakers and their subsidiaries already provide around 15,000 jobs in Canada.

Canada turns to new partners

While Canada has no domestic automaker, it has nevertheless built a substantial automotive industry. Over the past decades, primarily US manufacturers and their suppliers have established plants in Canada, with components sometimes crossing the US-Canadian border multiple times during the manufacturing process—collaboration was once very close. However, the policies of former US President Trump created fissures in this alliance. Since then, the Canadian government has increasingly turned to other partners and, in 2026, even entered into a partnership with China that not only provides significant tariff relief for importing Chinese electric vehicles into Canada but also aims to attract Chinese automotive companies to Canada through joint ventures in the long term.

For electromobility, Canada offers not only green energy but also critical raw materials and existing or under-construction facilities to process these resources into battery-grade materials. Canada ranks among the world’s most significant mining nations. The country extracts a variety of critical raw materials such as cobalt, graphite, lithium, nickel, and copper, and is also developing the extraction of rare earth elements. These resources are essential for batteries, electric motors, wind turbines, and medical devices. To this end, Germany and Canada already signed a raw materials partnership last August.

Several battery cell manufacturers have decided to establish their North American factories in Canada, including Volkswagen’s battery subsidiary PowerCo—thanks in part to extensive incentives from the federal government in Ottawa and the provinces. However, these factories were originally intended to serve the North American market. With the US, under Trump’s incentive policies, distancing itself from electromobility, a key customer for Canadian battery projects is disappearing and new alliances are being sought. While Canada has not yet made a significant impact in hydrogen mobility, its green energy resources offer potential in this sector as well.

Specific measures from the new German-Canadian collaboration are not yet known, as the document signed by both ministers is officially still a declaration of intent. However, the German Federal Ministry for Economic Affairs and Climate Action emphasises the global significance of the initiative: “With this declaration of intent, Canada and Germany are sending a clear signal for closer partnership in key future industries. They reaffirm their commitment to jointly address geopolitical challenges and sustainably strengthen economic cooperation.”

“Combining strengths. Safeguarding supply chains. Promoting forward-looking technologies. Canada and Germany are committed to these three goals,” said German Minister for Economic Affairs and Climate Action, Katherina Reiche (CDU). “The geopolitical challenges of our time demand a strategic response. Together, we are sending out a clear signal—for economic security, for technological sovereignty and for a fresh stimulus to growth on both sides of the Atlantic.”

Canada’s Minister of Innovation, Science and Industry, Mélanie Joly, adds: “Canada is a proud auto nation, backed by world class workers, leading-edge innovation and vehicles that rank among the best produced anywhere. With this joint declaration, Canada and Germany are strengthening collaboration on EV and hydrogen mobility, advancing battery and critical minerals partnerships, and drawing high-value investment into communities across the country. This agreement will help grow and modernize Canada’s auto sector, create good jobs nationwide and reinforce our role as a global leader in next-generation vehicle manufacturing.”

canada.ca, bundeswirtschaftsministerium.de (in German)