Volkswagen Plans to Invest in Mines to Become Major Battery Supplier

German automaker Volkswagen plans to invest in mines to reduce battery costs, meet half of its own demand and sell to third-party customers, through its battery unit PowerCo. The carmaker also wants PowerCo to become a global battery supplier, not just produce for Volkswagen’s needs. As a start of this goal, PowerCo will deliver battery cells to Ford for the 1.2 million vehicles the U.S. carmaker is building in Europe on Volkswagen’s electric MEB platform. In the longer term, the company also plans to build enough cells to meet half of its global battery needs, with most production capacity located in Europe and North America.

“The bottleneck for raw materials is mining capacity – that’s why we need to invest in mines directly,” Volkswagen’s board member in charge of technology Schmall said.

The German automotive major has started partnering on supply deals with mines in Canada, where it will build its first North American battery plant.

“In future, there will be a select number of battery standards. Through our large volume and third-party sales business, we want to be one of those standards,” Schmall said.

Automakers including Tesla and Stellantis, as well as Volkswagen, have been scrambling to lower battery costs in order to make electric vehicles (EVs) more affordable.

Only Tesla has pledged more investment into battery production than Volkswagen, but ramping up production is a challenge for the EV maker as well, and it still works with Asian suppliers.

Many automakers have signed agreements with producers to supply battery materials like lithium, nickel and cobalt but few have so far made direct investments in mines.

Volkswagen’s PowerCo, set up last year, is targeting €20 billion in annual sales by 2030. Production will start in 2025 at PowerCo’s plant in Salzgitter, Germany, 2026 in Valencia, Spain and 2027 in Ontario, Canada.

Still, Schmall is confident the carmaker can expand quickly – and must do so if it wants to build an affordable EV, in which 40% of the costs come from the battery.

Volkswagen unveiled details of a €25,000 EV it aims to sell in Europe from 2025.

In Volkswagen’s €180 billion five year spending plan, up to €15 billion is earmarked for its three announced battery plants and some raw material sourcing.

The carmaker has so far nailed down raw material supply until 2026, by which time the German and Spanish plants will be in operation, and will decide in the next few months how to meet its demand from then on.

It has also ordered some $14 billion in batteries from Swedish startup Northvolt.

Currently Asian producers such as China’s CATL and South Korean battery makers LG Chem and Samsung SDI are dominating global cell production. Asian firms make up almost half of planned battery cell capacity in Europe.

Need to access the insight?

Start your 7-day free trial now

Need to access the insight?

Start your 7-day free trial now

Need to access the insight?

Start your 7-day free trial now

Do you need to access special insights on this matter?

Start your 7-day free trial  and become a member today

Subscribe to Top Insights Today

Subscribe to Executive Newsletter Top Insights Today

The Executive Newsletter -Top Insights Today- puts global business events in perspective through special insights

Join the ranks of global executives and subscribe to Top Insights Today

Top Insights Today covers insights on energy, clean-tech, oil&gas, mining, rare earths, defense, aviation, infrastructure, manufacturing, electrical vehicles, big-tech, finance and politics of business

By clicking subscribe you agree to our privacy and cookie policy and terms and conditions of use.

Read more insights

Lynas to Invest A$500 Million in Western Australia Rare Earths Project

Australia’s Lynas Rare Earths unveiled plans to invest A$500 million to expand capacity at its Mt. Weld mine located in Western Australia. The miner aims to meet market demand for rare-earth materials. Mt. Weld mine contains deposits of rare-earth elements neodymium (Nd) and praseodymium (Pr), both of which are in high demand for making magnets used in electric vehicles (EVs) and wind energy equipment.

Chinese Manufacturing Grows at Fastest Pace in More Than a Decade

China’s manufacturing activity grew at its fastest pace in more than a decade in February, surpassing expectations as production soared after the lifting of Covid-19 restrictions late last year. The manufacturing purchasing managers’ index (PMI) shot up to 52.6 from 50.1 in January, according to China’s National Bureau of Statistics, above the 50-point mark that separates expansion and contraction in activity. The PMI far exceeded forecasts of around 50.5 and reached its highest mark since April 2012. China had recorded one of its worst years in 2022 over nearly half a century, primarily because of strict Covid-19 lockdowns and subsequent widespread infections. The curbs were abruptly lifted in December as the highly transmissible Omicron spread across the country.

EU Ministers Agreed on Proposed Climate Change Laws

EU countries agreed on proposed laws to fight climate change on Wednesday after hours of late night discussions. The proposals include a 2035 phase out of new combustion engine car sales and a multibillion euro fund to protect lower income citizens from CO2 costs. 

Stay informed

error: This content is protected !!