A $2.9 billion joint venture has been established to create battery materials in Europe by the new battery company PowerCo of the Volkswagen Group and Umicore, a Belgian circular materials technology company.
InsideEVs reported that from 2025, the joint venture would provide essential materials to PowerCo’s European battery cell plants. By the end of the decade, it should be possible to produce cathode material and its precursors in sufficient quantities to power around 2.2 million all-electric vehicles, or 160 GWh of annual cell capacity.
As per Automotive News Europe, Umicore CEO Mathias Miedreich stated that there is a “strong industrial logic” to locating production at Umicore’s recently opened battery materials plant in Nysa, Poland. Moreover, a choice would be made “rather quickly,” he continued.
With an anticipated annual capacity of 40 GWh in 2026, production at the joint venture is expected to begin in 2025 to supply PowerCo’s Salzgitter battery facility.
Both parties anticipate increasing the JV’s yearly production capacity to 160 GWh by the end of the decade based on market and demand development.
PowerCo CEO Frank Blome commented during the contract signing:
| “The availability, cost and technical performance of battery cells are key requirements for the successful ramp-up of e-mobility. By building up substantial production capacities, we are securing the rapidly growing demand for battery-grade materials for our main customer Volkswagen AG in terms of volume and at optimal cost.” |
Umicore and PowerCo will cooperate on the ethical and sustainable procurement of raw materials, an area in which Umicore is a pioneer in the industry, under the terms of additional agreements.
In addition, Umicore will provide PowerCo refining services in this context. Both partners also want to eventually incorporate parts of refining and battery recycling into the scope of the JV based on Umicore’s technology and expertise.
At the official signing of the JV, Thomas Schmall, Group Board Member for Technology at Volkswagen AG and Chairman of the Supervisory Board of PowerCo SE, said:
| “Cathode material is an indispensable strategic resource for battery production, accounting for roughly fifty percent of overall cell value. 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 here in Europe.” |
In support of its unified cell strategy in Europe, the alliance will enable PowerCo secure and affordable access to Umicore’s cutting-edge, sustainably sourced, and customized high-performance battery materials.
Additionally, it will provide PowerCo access to Umicore’s upstream know-how and established manufacturing capabilities.
Jörg Teichmann, PowerCo Chief Procurement Officer, emphasized:
| “We are consistently entering the holistic value creation of the battery. A supplier industry for battery materials on the scale required does not yet exist today. We are changing that through our long-term cooperation with Umicore as a global market leader for the key materials used in cell production.” |
Umicore will get secured access to a significant portion of the European market for EV cathode materials with assured value and profitable returns through firm take-or-pay obligations.
It is worth noting that the most significant single factor in overall battery cost is cathode active materials, which are also the major technological lever for battery performance.
Ralph Kiessling, EVP Energy & Surface Technologies at Umicore:
| “Through this agreement, we are bringing in our long-standing and proven expertise in the battery materials value chain, while gaining secured access to substantial sales volumes. Moreover, the JV will unlock significant cost and operational synergies with the Umicore Group, hereby strongly contributing to Umicore’s 2030 Return on Capital Employed ambitions expressed at our recent Capital Markets Day.” |
Nonetheless, the agreement is still subject to regulatory clearance and standard closing conditions. The name of the joint venture has not yet been selected and will be revealed at a later date.
