Volkswagen Group has begun searching for a site for the automaker's first battery cell factory in North America, CEO Oliver Blume said.
"Canada is one logical option for the construction of a gigafactory in the region of North America,” Blume said on Thursday, adding it offered ideal economic conditions and high sustainability standards.
Such a plant would be VW Group's first gigafactory outside Europe.
VW's battery subsidiary PowerCo also announced it was extending a deal to cooperate with Belgium's Umicore on shipping cathode material to Canada.
VW said it was a long-term strategic partnership geared toward future cell production in North America.
In the August memorandum of understanding, VW and mineral-rich Canada agreed to intensify efforts to secure access to lithium, nickel and cobalt.
In September, VW and Umicore announced a $2.9 billion battery parts joint venture to supply PowerCo's European battery cell factories with key materials from 2025 onwards.
Europe's automakers have pushed to secure stakes in battery production on the continent, but the industry there is still in its infancy.
The U.S. is also trying to attract investments in green technology such as electric-powered vehicles and battery production with its Inflation Reduction Act.
The European Union has taken issue with the $430 billion package, which makes tax breaks conditional on U.S-manufactured content, due to concerns of unfair competition.