Volkswagen is intent on becoming one of the largest electric vehicle manufacturers on earth, and to do that, it wants more control over its supply of batteries. That’s why the automaker now plans to invest in mining companies to bring down the cost of the materials that make up battery cells.
The automaker wants its subsidiary, PowerCo, to become a global player on the battery market. By doing that, it believes it can not only fill its own requirements, but can become a supplier to other automakers, too.
“In future, there will be a select number of battery standards. Through our large volume and third-party sales business, we want to be one of those standards,” Thomas Schmall, VW’s head of technology, told Reuters. “The bottleneck for raw materials is mining capacity – that’s why we need to invest in mines directly.”
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It has already been decided that PowerCo will have to supply batteries for Ford vehicles. Specifically, it will provide battery cells that go into electric vehicles that the American automaker bases on VW’s MEB platform.
To accomplish its ambitions, the automaker has already started turning to Canadian mining companies, and announced that its third global battery plant will be located in the nation. The closer it can get to the mines, though, the faster it can secure the supply of materials needed to make all of the EVs it wants to in the future.
By 2030, PowerCo is targeting more than €20 billion ($21.3 billion USD at current exchange rates) in annual sales. That’s an ambitious target for a company that won’t start producing at capacity until its Salzgitter, Germany, plant opens in 2025. It will be followed by another in Valencia, Spain, on which it broke ground two days ago, that will open in 2026, and then by the Canadian plant, which is expected to start producing cells in 2027.
Read: Volkswagen Will Build Its First Overseas Battery Factory In Canada
“We are moving into the fast lane with PowerCo,” said Schmall at the groundbreaking event in Spain. “Our objective is to make PowerCo a global player in the battery business and pave the way for better mobility with sustainably manufactured battery cells. The gigafactory Valencia is an important milestone in that.”
Volkswagen and PowerCo have a big climb ahead of them if they want to catch up with Asian companies, such as CATL, LG Chem, and Samsung, which now have a big lead over it in the battery game.
If it wants to build a profitable, low-price EV, though, as it has said it does, bringing down the cost of batteries will be a vital step along the way. Volkswagen has already decided how it will supply its needs for the next three years, according to Schmall. Now it’s trying to figure out what it will happen after that.
