PowerCo and Umicore: a joint venture for battery production in Europe

PowerCo and Umicore: a joint venture for battery production in Europe

The new joint venture, equally owned by PowerCo and Umicore, will invest €3 billion to produce key materials for battery cells in Europe: the target is an annual capacity of 160 GWh, equivalent to the production of 2.2 million electric vehicles per year.

Batteries are the heart of electric cars, and innovation in this area is key to the development of zero-emission mobility. That is why PowerCo - Volkswagen Group’s company for the battery business - and Umicore, a Belgian group specializing in circular materials technology, have founded a joint venture to produce precursors and cathode materials in Europe. The latter, in particular, are a key component of the battery, both in terms of performance and cost.

Starting in 2025, the joint venture will supply materials to PowerCo's European factories, where battery cells will be produced. The aim is to produce, by the end of the decade, cathode material and precursors to support cell production with a total capacity of up to 160 GWh per year, which corresponds to about 2.2 million electric vehicles on an annual basis.


From left to right: Thomas Schmall, Group Board Member for Technology at Volkswagen AG and Chairman of the Supervisory Board of PowerCo SE, Jörg Teichmann, PowerCo Chief Procurement Officer, Ralph Kiessling, EVP Energy & Surface Technologies at Umicore, Umicore CEO Mathias Miedreich

Sustainable Sourcing

Umicore and PowerCo will work together on sustainable and responsible sourcing of raw materials, an area in which Umicore is an industry leader. Umicore will also provide refining services to PowerCo, which at a later stage will become activities managed by the joint venture, along with battery recycling.

"Cathode material is an indispensable strategic resource for battery production and accounts for roughly half of overall cell value. Having immediate and long-term access to extensive capacity is thus a very clear competitive advantage. We are setting up a sustainable, transparent supply chain with high environmental and social standards, localizing value creation in Europe", explained Thomas Schmall, Volkswagen Group Board Member for Technology and Chairman of the Supervisory Board of PowerCo.

A win-win project

The joint venture will start production in 2025, at a site yet to be defined, to supply PowerCo's Salzgitter factory, reaching an annual capacity of 40 GWh in 2026. The long-term goal, however, is to increase the joint venture's annual production capacity to 160 GWh by the end of the decade. The joint venture is perfectly equal, with equal sharing of costs, investments, revenues and profits, and the total planned investment is 3 billion euros.

This will give both partners an advantageous position in the fast-growing e-mobility market in Europe. Through this partnership, PowerCo will be able to ensure the secure supply of innovative, sustainable, tailored and high-performance materials on cost-competitive terms for the European production of the unified cell (which will be used on a very large share of Volkswagen Group's electric vehicles, up to 80% of the total). Umicore, for its part, will be able to count on a secure and large-scale order, thus securing an important part of European demand for cathode materials.


How the joint venture works

The joint venture has been defined following the criteria of profitability and return for both partners and will create significant synergies and economies of scale for each side. Umicore's intellectual property and know-how will be available to the joint venture through a licensing agreement.

"The availability, cost, and technical performance of battery cells are key requirements for the successful ramp-up of electric mobility. With the production capacities we are building up, we will be ready to meet the Volkswagen Group's growing demand for premium battery materials in terms of volume and at optimized costs", specified Frank Blome, CEO of PowerCo.

"Today there is still no supplier industry capable of providing battery materials in the required quantities. Thanks to our cooperation with Umicore this will change", added Jörg Teichmann, Chief Procurement Officer at PowerCo. Final activation of the joint venture remains subject to regulatory approval and customary closing conditions. The name of the joint venture has not been decided yet and will be disclosed at a later point in time.

SourceVolkswagen Newsroom

VGI | Responsible OU: VP | Creation date: article date | Class 9.1

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