Volkswagen Join Hands with Umicore on Battery Materials

Volkswagen, the latest European manufacturer to bring battery supply closer to home in the drive to electric cars, announced on Monday a $2.9 billion joint venture with Belgian materials company Umicore.

While the majority of the raw materials, such as lithium, cobalt, nickel, and manganese, will still be supplied from across the globe, the joint venture will focus on producing cathodes for batteries in Europe, most likely at Umicore’s Polish factory.

The companies involved in the initiative, Umicore and Volkswagen’s battery division PowerCo, said they also planned to work together on recovering metals from battery materials but did not specify when.

As governmental pressure rises to bring the supply chain, presently dominated by Asian competitors, closer to home, Europe’s automakers are rushing to gain shares in the expanding number of factories on the continent that are converting raw materials into batteries.

By 2030, Volkswagen wants to sell 70% of its cars in Europe as entirely electric vehicles. To safeguard its supply chains from geopolitical unrest and cut down on transportation expenses, Volkswagen is increasingly attempting to fence off its supply networks by region.

However, the European battery sector is still in its infancy. Efforts to mine raw materials in nations ranging from Germany to Portugal have been hampered by bureaucracy, and recycling facilities are unable to expand on a large scale without the availability of raw materials.

Umicore will create enough battery precursor and cathode material under the 3 billion euro ($2.9 billion) joint venture, which the firms announced in December, to power 160 gigawatt hours (GWh) of batteries, or 2.2 million cars.

At Volkswagen’s first battery facility in Salzgitter, Germany, construction will begin with materials for 40 GWh of capacity by 2026. By 2030, the automaker hopes to have six battery facilities in Europe with a combined capacity of 240 GWh.

According to Umicore CEO Mathias Miedreich, there is a “strong industrial rationale” to placing manufacturing at the company’s recently opened battery materials factory in Nysa, Poland. He also indicated a decision will be made “quite fast.”

The facility, which started producing in July, may potentially be expanded to have a capacity of more than 200 GWh by the end of the decade, which would be sufficient to power around three million electric cars.

Also agreed upon by the parties was Umicore’s refinement of cathode material for the first 60 GWh of capacity.

After the Belgian firm unveiled a 5 billion euro plan to expand its battery material business, shares in the company crashed in June. Analysts were worried about the increased debt and external capital needed amid escalating expenses.

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