VW subsidiary PowerCo & Umicore launch battery joint venture
The Volkswagen Group’s new battery subsidiary PowerCo and the Belgian materials technology group Umicore have established a joint venture for cathode and prematerial production in Europe. From 2025, the joint venture is to supply PowerCo’s European battery cell factories with key materials.
By the end of the decade, the partners want to produce cathode and battery production materials for 160 gigawatt-hours of cell capacity per year. This corresponds to an annual production capacity sufficient for around 2.2 million fully electric vehicles, as Volkswagen calculates.
The joint venture will be based in Brussels and will invest three billion euros in building up its own activities around the development and production of the cathodes and other primary materials, according to the statement. With its headquarters in Brussels, the as yet unnamed joint venture will be located close to Umicore’s headquarters, which is also in Brussels. PowerCo’s global headquarters are in Salzgitter, next to the company’s German battery factory, for which the foundation stone was laid in July.
VW sees the cathode material as the “central technological lever” for battery performance and also as the most important cost factor for its own battery production. Therefore, the long-term partnership with Umicore will focus on the production of precursor and cathode materials in Europe, “which are of central strategic importance for battery value creation”. Under further agreements, Umicore and PowerCo also intend to collaborate on sustainable and responsible sourcing of raw materials.
Production to begin in 2025, location remains unclear
The establishment of the joint venture does not come as a surprise: Volkswagen had already announced such a joint venture in December 2021. At that time, the initial production capacity of 20 GWh at the start of production in 2025 and the final capacity of 160 GWh were already mentioned. What is new now is the location of the company and the total investment. Where the production will be located, however, is still open.
Umicore had only last week opened its first own cathode material production in Nysa, Poland – among the customers for cathode material is ACC, the battery joint venture of Stellantis, Total and Mercedes-Benz. As mentioned, PowerCo is currently building the first battery factory in Salzgitter, and another, identical plant will be built in Sagunt near Valencia. In addition, the unit cell is also to be produced at Northvolt in Sweden, and an as yet unspecified location in Eastern Europe is also planned. No further details have yet been given for the PowerCo battery factories five and six.
What is clear is that PowerCo will gain access “to a significant extent and at competitive prices” to sustainably sourced and customised battery materials for the group’s unit cell and will also benefit from the partner’s production know-how. In return, Umicore secures access to a significant share of the European market for cathode materials for electric vehicles “through binding take-or-pay agreements”. Umicore’s intellectual property and know-how will be available to the joint venture through a licensing agreement to secure its position as a technology leader.
In the area of raw material sourcing, Umicore will also provide refining services to PowerCo, according to the statement. In addition, both partners are aiming “on the basis of Umicore’s technology and expertise” to bring refining and recycling activities into the joint venture at a later date. Volkswagen is also known to operate its pilot recycling plant at the Salzgitter site.
“Cathode material is an indispensable strategic resource for battery production, accounting for roughly fifty per cent of overall cell value,” says VW board member for technology Thomas Schmall. “Immediate and long-term access to extensive capacity is thus a very clear competitive advantage. We are setting up a sustainable, transparent supply chain with high environmental and social standards, localizing value creation here in Europe.”
“This partnership is a strong signal of recognition of our product and process expertise and a testament to the success of our strategy to establish sustainable industrial-scale, closed loop battery materials value chains in key regions,” adds Umicore CEO Mathias Miedreich. “We are supporting our customers on their path to electrification right from the start, and are very pleased to partner with PowerCo and support Volkswagen in their fast transformation towards sustainable electric mobility.”
With reporting by Sebastian Schaal, Germany.