Volkswagen announced on Monday a $2.9 billion battery parts joint venture with Belgian materials firm Umicore, becoming the latest European automaker to bring battery supplies closer to home in the shift towards electric vehicles.
While raw materials – among them lithium, cobalt, nickel and manganese – will still be largely sourced from across the world, cathode production for batteries will take place in Europe under the joint venture, most likely at Umicore’s Poland plant, reports Reuters.
The venture – between Umicore and Volkswagen’s battery unit PowerCo – also plan to collaborate on recycling metals from battery materials, the firms said, without giving a timeframe.
Europe’s automakers are scrambling to secure stakes in the growing number of plants on the continent turning raw materials into batteries as political pressure grows to bring the supply chain, currently dominated by Asian players, closer to home.
Volkswagen is aiming for 70% of its sales in Europe to be fully electric vehicles by 2030, and is increasingly trying to fence in its supply chains by region to protect them from geopolitical tensions and reduce transport costs.
But Europe’s battery industry is still in its infancy, with attempts to mine raw material in countries from Germany to Portugal held up by red tape and recycling facilities unable to develop at scale without the raw material on hand.
Under the 3 billion euro ($2.9 billion) joint venture, which the companies flagged in December, Umicore will produce enough battery precursor and cathode material for 160 gigawatt hours (GWh) of battery capacity – enough for 2.2 million vehicles.
It will start with material for 40 GWh of capacity by 2026 at Volkswagen’s first battery plant in Salzgitter, Germany. The carmaker plans to build six battery factories in Europe totalling 240 GWh of capacity by 2030.
There is a “strong industrial logic” to locating production at Umicore’s newly inaugurated battery materials plant in Nysa, Poland, Umicore CEO Mathias Miedreich said, adding a decision would be taken “rather quickly”.
Umicore said last week it saw potential to increase the capacity of the plant, which began production in July, to over 200 GWh in the second half of the decade, enough to power around three million electric vehicles.
The companies also agreed that Umicore would refine cathode material for the first 60 GWh of capacity.
Shares in the Belgian company plummeted in June after it announced a 5 billion euro plan to bulk up its battery material business, with analysts concerned about the higher debt and external funding required amid rising costs.
