Volkswagen plans to invest in mines to reduce battery costs, meet half of its own needs and sell to third-party customers, the carmaker’s technology board member for know.
Its strategy is in line with a broader trend that automakers are seeking greater control over parts of the supply chain traditionally delegated to third parties, from energy production to energy production. to sourcing raw materials, as they compete for scarce resources they urgently need to meet electrification goals.
Europe’s largest carmaker wants its PowerCo battery division to become a global supplier of batteries, as well as meet half of its own needs with factories mainly in Europe and North America, says Thomas Schmall told Reuters in an interview.
PowerCo will begin by supplying batteries to Ford for the 1.2 million vehicles the American automaker is building in Europe on Volkswagen’s electric MEB platform, he said.
“The bottleneck for raw materials is mining capacity – that’s why we need to invest directly in the mines,” he said.
The automaker is collaborating on supply agreements with operators in Canada, where it will build its first battery plant in North America.
Such partnerships to secure financing can cut mine development time by years for new miners, said John Meyer, senior analyst at retail investment bank SP Angel. into the profession.
Schmall declined to comment on other locations being considered or when Volkswagen might invest directly in the mines until the market is more stable.
“In the future, there will be a select number of battery standards. Through our volume and third-party sales business, we want to be one of those standards,” he said.
Buying batteries at a reasonable cost is a challenge for automakers like Volkswagen, Tesla and Stellantis looking to make affordable electric vehicles (EVs).
Only Tesla has committed to investing more in battery production than Volkswagen, a Reuters analysis shows – although even the US EV maker is struggling to ramp up production and is hiring Asian supplier to help.
Few automakers disclose direct stakes in the mines, but many have reached agreements with manufacturers to supply lithium, nickel and cobalt and pass them on to their battery suppliers. Surname.
Securing those resources in a timely manner, close to refineries and from places outside of China is key to winning the battery race, says Geordie Wilkes of UCL’s Institute for Sustainable Resources.
PowerCo, founded last year, is targeting annual sales of over 20 billion euros ($21.22 billion) by 2030.
It’s an ambitious route for a unit that is not yet in large-scale production. Production will begin in 2025 at PowerCo’s plant in Salzgitter, Germany, 2026 in Valencia, Spain, and 2027 in Ontario, Canada.
Still, Schmall is confident the automaker can expand quickly — and must do so if it wants to build an affordable EV where 40% of the cost comes from the battery.
On Thursday, Volkswagen released details of the €25,000 electric car it plans to sell in Europe from 2025.
China’s BYD, which also makes batteries, trailed Volkswagen in the affordable EV race and outsold the German automaker for the second time in four months in China in February.
Half of the employees at Volkswagen’s PowerCo are industry veterans from Asia, where manufacturers such as CATL, LG Chem and Samsung SDI dominate global cell production.
In Volkswagen’s five-year spending plan of 180 billion euros, up to 15 billion euros are earmarked for three announced battery plants and some raw material sources.
Schmall said in the interview that the automaker has so far fixed a raw material supply until 2026 and will decide in the next few months how to meet its demand from that point.
It has also ordered about $14 billion in batteries from Northvolt’s plant in Sweden.
“Reducing battery costs even further is a challenge,” says Schmall. “We’re using all the tools with PowerCo.”
($1 = 0.9427 euros)
(Reporting by Victoria Waldersee, Additional reporting by Nick Carey, Editing by Susan Fenton and Angus MacSwan)