Supplier Invest Bid In Volkswagen Global Bee Mines To To Battery In

Volkswagen to invest in mines in bid to become global battery supplier — To A Of Part Carmakers Trend Heretofore Vw's More Picture Is For Had Mostly Control Chains Left Parties In Been To Supply Over Which Seek Stock Mines Third Investment

Fri, 17 Mar, 2023 - 14:35

Volkswagen plans to invest in mines to bring down the cost of battery cells, meet half of its own demand and sell to third-party customers, the carmaker’s board member in charge of technology said.

Its strategy aligns with a wider trend of carmakers seeking greater control over parts of the supply chain traditionally left to third parties, from energy generation to raw material sourcing, as they compete for scarce resources they urgently need to meet electrification targets.

Europe’s biggest carmaker wants its battery unit PowerCo to become a global battery supplier, as well as meet half its own demand with plants mostly in Europe and North America, Thomas Schmall said in an interview.

PowerCo will start by delivering cells to Ford for the 1.2 million vehicles the US carmaker is building in Europe on Volkswagen’s electric platform, he said. “The bottleneck for raw materials is mining capacity — that’s why we need to invest in mines directly,” he said.

Thomas Schmall, Volkswagen board member in charge of technology: 'The bottleneck for raw materials is mining capacity — that’s why we need to invest in mines directly.' File picture: VolkswagenAG.com

The carmaker was partnering on supply deals with mining companies in Canada, where it will build its first North American battery plant.

Such partnerships guaranteeing finance can cut years off mine development times for junior miners, John Meyer, senior analyst at investment bank SP Angel, said.

Mr Schmall declined to comment on further locations under consideration or when Volkswagen might invest directly in mines until the market was more settled.

"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," he said.

Acquiring batteries at a reasonable cost is a challenge for carmakers such as Volkswagen, Tesla, and Stellantis looking to make electric vehicles affordable.

Only Tesla has pledged more investment into battery production than Volkswagen. Few carmakers have disclosed direct stakes in mines, but many have struck deals with producers to source lithium, nickel, and cobalt and pass them on to their battery suppliers.

Securing those resources in time, close to refineries, and from places outside of China is key to winning the battery race, Geordie Wilkes of the UCL Institute for Sustainable Resources said.