PowerCo, Volkswagen Group's battery company, and Umicore, the Belgian circular materials technology group, announced the founding of a joint venture for precursor and cathode material production in Europe.
According to the agreement, the joint venture will supply PowerCo's European battery cell factories with key materials from 2025 onwards. The goal is to produce cathode material and their precursors for 160 GWh cell capacity per year by the end of the decade, which would be enough to power about 2.2 million all-electric vehicles.
The two companies plan to invest €3 billion ($2.9 billion) into new materials production capacities at a site that hasn't been announced yet. The press release notes the production site search is still ongoing and the name of the joint venture has not been decided yet.
That said, Umicore CEO Mathias Miedreich was quoted as saying by Automotive News Europe that there is a "strong industrial logic" to locating production at Umicore's newly inaugurated battery materials plant in Nysa, Poland. He added that a decision would be taken "rather quickly."
Production at the joint venture is scheduled to start in 2025 to supply PowerCo's Salzgitter battery factory, with the annual capacity in 2026 estimated at 40 GWh. Based on market and demand development, both partners expect to grow the JV's annual production capacity to 160 GWh by the end of the decade.
Under the terms of the agreement, both partners will jointly control the JV and equally share costs, investments, revenues and profits. Volkswagen Group is confident the JV will give both partners a significant first-mover advantage in the fast-growing e-mobility market in Europe.
The partnership will give PowerCo secure and cost-competitive access to Umicore's innovative, sustainably sourced and tailored high-performance battery materials for its unified cell strategy in Europe. It will also allow PowerCo to benefit from Umicore's proven production capabilities as well as its upstream expertise.
In turn, Umicore will get secured access, through firm take or pay commitments, to an important part of the European demand for EV cathode materials at guaranteed value creative returns. Cathode active materials are the key technological lever for battery performance and the biggest single contributor to overall battery cost.
Volkswagen Group plans to build six battery plants in Europe by 2030 starting with Salzgitter in Germany.
