Volkswagen hopes to become global battery supplier

Invests in mines to bring down cost of battery cells, sell to third party

BERLIN:

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 MEB platform, he said.

“The bottleneck for raw materials is mining capacity – that’s why we need to invest in mines directly,” he said.

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 of mine development times for junior miners, John Meyer, senior analyst at boutique investment bank SP Angel, said.

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.

Published in The Express Tribune, March 19^th, 2023.

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