BERLIN, March 17 (Reuters) – Volkswagen ( VOWG_p.DE ) plans to invest in mines to lower the cost of battery cells, meet half of its own demand and sell to third-party customers, a board member of the automaker said. in charge of technology I said.
Europe’s biggest carmaker wants its PowerCo battery unit to become a global supplier of batteries and not just produce for Volkswagen’s own needs, Thomas Schmal said in an interview with Reuters.
PowerCo will start by supplying cells to Ford ( FN ) for the 1.2 million cars the U.S. automaker is building in Europe on Volkswagen’s electric MEB platform, he said.
In the long term, Volkswagen plans to build enough cells to meet half of its global battery needs, with most production facilities located in Europe and North America, according to Schmall.
“The bottleneck for raw materials is mining capacity – that’s why we need to invest directly in the mines,” he said.
The automaker is partnering on supply deals with mining companies in Canada, where it will build its first battery plant in North America.
Schmall declined to comment on other locations under consideration or where or when Volkswagen might invest directly in mines, saying the company would not disclose that information until the market is more settled.
“There will be a select number of battery standards in the future. Through our high volume and third-party sales business, we want to be one of those standards,” he said.
AMBITIOUS ROAD MAP
Producing or sourcing batteries at a reasonable price is a key challenge for automakers such as Volkswagen, Tesla ( TSLA.O ) and Stellantis ( STLAM.MI ) as they seek to make electric vehicles (EVs) affordable.
Only Tesla has pledged more investment in battery production than Volkswagen, according to a Reuters analysis – although even the US electric car maker is struggling to ramp up production and is recruiting Asian suppliers to help.
Few carmakers have disclosed direct stakes in the mines, but many have struck deals with the producers to obtain materials such as lithium, nickel and cobalt and pass them on to their battery suppliers.
PowerCo, set up last year, aims for 20 billion euros ($21.22 billion) in annual sales by 2030.
This is an ambitious roadmap for a unit that is not yet producing at scale. 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 scale up quickly — and it needs to if it wants to build an affordable EV in which 40 percent of the cost comes from the battery.
Volkswagen on Thursday released details of a €25,000 electric car it aims to sell in Europe from 2025.
China’s BYD, which also makes batteries, is far ahead of Volkswagen in the race for affordable EVs, and outpaced the German automaker for the second time in four months in China in February.
In Volkswagen’s five-year spending plan of 180 billion euros, up to 15 billion is earmarked for the three announced battery plants and some sources of raw materials.
The carmaker has so far limited supplies of raw materials until 2026 – until then the German and Spanish plants will be operational – and will decide in the next few months how to meet its demand from then on, Schmal said in the interview.
It has also ordered about $14 billion worth of batteries from Northvolt’s Swedish plant.
“Further reducing the cost of batteries is a challenge,” Schmall said. “We use all the tools with PowerCo.”
Asian manufacturers such as CATL, LG Chem and Samsung SDI dominate global cell production, with almost half of Europe’s planned battery cell capacity coming from Asian players.
Half of Volkswagen’s PowerCo staff are industry veterans from Asia, Schmall said, allowing the battery pack to enter the industry at the top of the learning curve.
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Reporting by Victoria Waldersee; Editing by Susan Fenton
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