Volkswagen Goes Mining for Cheaper Auto Batteries

Paul Myles

TU-Editor

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17th March 2023

Volkswagen is planning to become a major stakeholder in mining as it bids to become a global heavyweight in automotive battery production.

Reuters reports that the German auto group hopes to bring down the cost of battery cells for BEV products both for itself and as a supplier to third-party automakers, its board member in charge of technology said this week. Volkswagen is hoping its battery production unit, PowerCo, will become a global battery supplier, Thomas Schmall told the news agency in an interview.

PowerCo will start by delivering cells to Ford for the 1.2 million two new BEVs the American carmaker is planning to market in Europe using Volkswagen’s electric MEB platform. Looking ahead, Schmall said Volkswagen plans to build enough cells to meet half its global battery needs, with most production capacity located in Europe and North America, where it hopes to benefit from the Inflation Reduction Act subsidies.

Created last year, PowerCo is targeting $21.22Bn in annual sales by 2030. Production will start in 2025 at its plant in Salzgitter, Germany, 2026 in Valencia, Spain and 2027 in Ontario, Canada. Half the staff at the unit are industry veterans from Asia, Schmall said, so the unit should be able to benefit from expertise from the world’s BEV hot-house.

So far, the automaker has secured battery raw material supply until 2026 in anticipation that by then both its German and Spanish plants will be in operation. It has also ordered batteries worth $14Bn from Northvolt’s Swedish plant.

Schmall told Reuters: “The bottleneck for raw materials is mining capacity, that’s why we need to invest in mines directly. 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. Bringing down battery costs further is a challenge. We’re using all the instruments with PowerCo.”

— Paul Myles is a seasoned automotive journalist based in Europe. Follow him on Twitter @Paulmyles_