Volkswagen’s new battery company, Powerco, said on Monday that it would partner with Umicore to make materials for the batteries of about 2.2 million electric vehicles. The new joint venture is a big step forward because it creates one of the first fully integrated auto supply chains. This will help VW sell more electric vehicles (EVs).
power is a company that Volkswagen owns 100% of. It was set up in July 2022 to handle Volkswagen’s global battery operations. Volkswagen and Powerco started building the first of six battery plants in Salzgitter, Germany, in July.
As the demand for electric cars keeps increasing in the US, Europe, China, and other major auto markets, automakers are scrambling to keep up. Many car companies have already sold out of their best-selling electric vehicles for the year. With demand expected to keep going up, the big question is where automakers will get all the materials they need.
Since the Inflation Reduction Act was passed in August, automakers from all over the world have been rushing to make deals to lock up essential battery materials in North America. Hyundai, Mercedes-Benz, Honda, and Volkswagen, among others, have signed contracts to get minerals from North America.
A Bloomberg Intelligence report says that Volkswagen’s new joint venture with Umicore will focus on Volkswagen’s home market in Europe, where the company expects to sell more electric vehicles than Tesla by 2025.
The partnership was first announced in December 2021, but today’s news confirms it and tells us more about what to expect in the future.
Why is the partnership between Volkswagen and Umicore important?
Volkswagen’s Powerco wants to build a total of six battery factories, which means it will need a lot of minerals to keep up with demand.
The cathode material is a key strategic resource that can’t be done without it. It makes up about half of the value of a cell as a whole. So, having access to a lot of capacity right away and for a long time is a clear competitive advantage. We are setting up a supply chain that is transparent, sustainable and has high standards for the environment and society. We are creating value here in Europe.
Volkswagen (PoweCo) and Umicore plan to work together in a 50/50 partnership where investments, costs, and profits will be split evenly. The partners are planning to spend about €3 billion (about $2.9 billion) to improve the supply chain and make it possible to make better materials.
The partnership between Volkswagen and Umicore could give Volkswagen a big edge in the European EV market. Umicore has one of the first fully integrated supply chains, from mining to refining.
So, Umicore said in July that it would build a factory in Canada to make cathode active battery materials (CAM) and their precursors (PCM), which are important for the performance of EV batteries and one of the most expensive components.
By 2030, the goal of the partnership is to have 160 GWh of cell capacity per year, which is enough to power about 2.2 million electric vehicles (EVs).
Thomas Schmall, the chairman of Powerco’s board of directors, talks about how important cathode material is to make EVs. He says.
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