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VW, Umicore join forces in battery materials venture

Volkswagen and Belgian group Umicore will work together to produce battery materials, the German auto group said Monday, as the carmaker looks to speed its transition to electric vehicles.

Volkswagen’s battery subsidiary PowerCo and Umicore will be equal partners in the project, investing a total of three billion euros ($2.9 billion), the auto giant said in a statement.

With the joint venture, Volkswagen aimed to “produce battery materials for 2.2 million fully electric cars per year by the end of the decade”, it said.

In all, Volkswagen is ploughing tens of billions into an ambitious switch to electric vehicles, while opening a clutch of battery factories across Europe.

By bringing more of the battery production supply chain in-house Volkswagen also hopes to reduce its reliance on Asian suppliers to equip its new-age models.

The founding of the joint venture was a “new step forward… to keep Europe more independent and more resistant, more resilient in (electric vehicle) supply chains”, Thomas Schmall, the head of PowerCo’s supervisory board, said at a press conference.

The materials tie-up, which is yet to be named, will start production in 2025 and initially supply Volkswagen’s flagship battery plant in Salzgitter, Germany.

The site, close to Volkswagen’s historic home in Wolfsburg, is the first of six battery factories being built by the auto giant in Europe, as well as another installation planned in the United States.

With the Umicore partnership, Volkswagen hopes to cover a “large part of supply” for its battery factory fleet in Europe.

The new venture in a growing market was a chance to “leapfrog the competition”, said Umicore CEO Mathias Miedreich, stressing that the scale of the planned production made it “unique”.

The lack of suppliers which could meet the volumes demanded by Volkswagen for its electric vehicles push meant the two sides had to “create it together”, said Joerg Teichmann, the chief procurement officer of PowerCo.