- Volkswagen ( OTCPK:VWAGY ) announced Monday its battery firm PowerCo has signed a $2.9B joint venture with the Belgian material company Umicore in a stride to bring battery supplies closer to home.
- The automaker said under this partnership PowerCo's European battery cell factories will be supplied with precursor and cathode material which are scheduled to be produced in Europe starting 2025. The production site search is still ongoing, however, Reuters noted it is most likely to be Umicore's Poland plant.
- "Cathode material is an indispensable strategic resource for battery production, accounting for roughly fifty percent of overall cell value," noted Thomas Schmall, Group Board Member for Technology at Volkswagen AG and Chairman of the Supervisory Board of PowerCo SE.
- Schmall added "We are setting up a sustainable, transparent supply chain with high environmental and social standards, localizing value creation here in Europe."
- By the end of the decade, the partners aim to produce cathode material and their precursors for 160 GWh cell capacity per year, which compares to an annual production capacity capable of powering about 2.2M full electric vehicles.
- This will bring PowerCo’s Salzgitter factory annual capacity of 40 GWh in 2026.
- Both partners have agreed to jointly control the JV and equally share costs, investments, revenues and profits as they invest €3B into new materials production capacities.
- The joint venture, yet to be named, remains subject to regulatory approval and customary closing conditions.
- At Buy rating, Seeking Alpha contributor Georgy Shishkov wrote: " Volkswagen remains a fundamentally solid player in the EV field and therefore offers a substantial opportunity for value investors."
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Volkswagen joins Umicore in €3B battery material deal