The Volkswagen Group and PowerCo SE, VW’s battery company, founded in July 2022, aims to boost the build-up of their global battery business through expansion to North America, as per the press release.
Volkswagen CEO Oliver Blume and François-Philippe Champagne, the Canadian Minister for Innovation, Science and Industry, signed an Addendum to the non-binding Memorandum of Understanding (MoU) of August 2022 to determine suitable Canadian sites for a cell factory.
The two will continue their cooperation in the raw material supply chain, battery value creation, and cathode material production, established in August.
PowerCo & Umicore
Moreover, PowerCo and Belgian materials technology group Umicore agreed to examine a strategic supply agreement for North America’s cathode material.
In September, the companies announced they would cooperate in Europe through a joint venture (JV) for precursor and cathode material production.
Battery technology is key for our strategy ‒ which is why we are forging ahead with the expansion of battery business at full speed. Canada is one logical option for the construction of a gigafactory in the region of North America. The country offers high sustainability standards and ideal economic conditions and the government of Canada has already proven to be a strong and reliable partner. This is just the beginning: The EV market in North America is at a turning point and we’re committed to investing across the entire region to leverage this historic chance for Volkswagen and our customers.
Volkswagen Group CEO Oliver Blume
The Addendum to the MoU was signed within Volkswagen Group Technology’s framework “be more” global leadership conference in Wolfsburg.
The auto industry is vital to the Canadian economy, supporting hundreds of thousands of families. And as the world transitions to a cleaner and more sustainable economy, Canada’s highly-skilled workers will be key in helping to build the green vehicle of the future. Today’s announcement between Canada and VW represents another major step forward, continuing our shared work to grow Canada’s and Germany’s clean transportation sector and meet global and North American demand for zero-emission vehicles.
François-Philippe Champagne, Canada’s Minister of Innovation, Science and Industry
ESG basis
Volkswagen and Canada signed the MoU in August this year. For the sustainable battery production development, the two aim to continue their cooperation through the ESG criteria (environmental, social and corporate governance) between PowerCo and the Canadian mining sector, seen as a responsibility and transparency world leader.
The key element in the signed Addendum is the search for possible sites for a gigafactory.
For each investment in environmentally sustainable battery production, we will not only consider site characteristics and infrastructure but also, and especially, the availability of adequate quantities of energy from renewable sources and competitive financial conditions.
Board Member for Technology of Volkswagen AG and Chairman of the Supervisory Board of PowerCo SE Thomas Schmall
He added that Canada is considered on the shortlisted sites for a North American plant in addition to other options. He said that PowerCo would initiate intensive negotiations with parties concerned to identify the most competitive site soon.
Additional cathode material agreement between PowerCo & Umicore
For the cell production supply chain development needed in North America, PowerCo SE and Umicore are raising their cooperation on developing regional supply chains for sustainable battery materials. The partners signed an MoU regarding a long-term strategic partnership to secure cathode materials for North America’s future cell production.
The cathode material is critical for the transformation towards electric mobility, presenting the key technological lever for battery performance and the primary cost factor, amounting to about 50% of the cell’s total value.
The two partners agreed in September to establish a joint company to provide key materials for producing the PowerCo unified cell for PowerCo’s European battery cell plants from 2025.
Battery cell plant’s annual capacity
By the decade’s end, the partners will make cathode materials and their precursors for annual 160 GWh of cell capacity in Europe, corresponding to about 2.2 million yearly production capacity of fully-electric vehicles. The transaction is still subject to regulatory approval and customary closing conditions.
The parties extend their cooperation to Canada through the strategic supply agreement. The goal is to secure capacities at competitive prices and delivery agreements for cathode materials and their precursors for PowerCo SE’s future cell production.
This concerns up to 40 GWh annual volume in 2030, corresponding to about 550,000 fully-electric vehicles. Deliveries are planned to begin in 2027.
To supply some partners, Umicore plans to begin constructing a Canadian plant for cathode materials and precursors’ large-scale industrial production from 2023. Notably, this plant will be the first of its type in North America.
PowerCo goes ahead with global battery cell business
PowerCo SE is a key player in North America’s battery value stream development. Under CEO Frank Blome’s management, the company is responsible for Volkswagen’s global battery activities and will secure battery cell supply for VW’s e-mobility offensive.
Volkswagen’s NEW AUTO strategy
The fast-growing battery cell business is a foundation of Volkswagen’s NEW AUTO strategy, aiming to make the company a sustainable, software-driven mobility leading provider.
With partners, PowerCo SE is increasing highly standardized cell production capacities worldwide to meet the rising demand for cells for sustainable battery-electric mobility.
