VW, Umicore form JV for battery materials

BERLIN – Volkswagen Group's PowerCo and materials technology firm Umicore will create a 3 billion euro ($2.9 billion) joint venture that will produce battery precursor and cathode material, likely at Umicore's new plant in Poland.

Umicore will supply PowerCo's European battery cell factories from 2025 onwards, starting at VW's Salzgitter factory, VW said in a statement on Monday.

The venture will target an annual capacity of 40 gigawatt hours in 2026 with the aim of reaching 160 gigawatt hours (GWh) of capacity by the end of the decade.

VW and Umicore will equally share costs, investments and profits in the joint venture.

VW plans to build six battery plants in Europe by 2030 starting with Salzgitter.

There is a "strong industrial logic" to locating production at Umicore's newly inaugurated battery materials plant in Nysa, Poland, Umicore CEO Mathias Miedreich said, adding a decision would be taken "rather quickly."

Umicore said last week it saw potential to increase the capacity of the plant, which began production in July, to over 200 gigawatt hours in the second half of the decade, enough to power around 3 million electric vehicles.

The JV includes a deal for Umicore to refine cathode material equivalent to 60 gigawatt hours of cell capacity, Miedrich said.

A total of 2.5 billion euros ($2.42 billion) of the 3 billion euros the two partners have committed to the venture will be invested by 2026, Miedreich said, adding it would be funded by a mixture of equity and non-recourse debt.

Umicore will be responsible for operational management, intellectual property licensing and appointing the venture’s CEO, Miedreich added.