Umicore and VW Arm Establish European Battery JV

29.09.2022 - Belgian chemical producer and recycler Umicore and PowerCo, the newly created battery company of the Volkswagen (VW) group, have officially founded their envisioned joint venture to produce precursor and cathode materials for VW’s European vehicle fleet.

The new company, headquartered in Brussels, is expected to provide Umicore with secured access to important part of European demand for EV cathode materials and cover a large portion of the needs of PowerCo’s gigafactories in the region.

Plans for the collaboration were floated late last year, and the  transaction, for which no completion date has been named, is still subject to regulatory approval and the customary closing conditions. A name for the joint venture, not yet finalized, will be disclosed in due course, the partners said. The search for a production site search is ongoing.

From 2025, the new JV, which is being touted as the first of its kind in the European automotive market, will begin supplying key materials to PowerCo’s European battery cell production at Salzgitter, Germany. Its goal is to have an annual output capability of 40 GWh by 2026.

With an investment of €3 billion, forward-looking plans call for an increase in annual capacity to 160 GWh by the end of the decade, depending on market and demand development. The output is expected to be sufficient to power 2.2 million fully electric vehicles.

Cathode active materials are crucial for a successful powertrain transition to e-mobility as they are the key technological lever for battery performance, as well as the biggest single contributor to overall battery cost, the companies stress.

Umicore and PowerCo said their collaboration will encompass  the sustainable and responsible sourcing of raw materials for battery production, an area in which Umicore claims industry leadership. The Belgian partner initially will provide refining services. At a later stage, elements of refining and battery recycling based on Umicore’s technology and knowhow are intended to be included in the scope of the JV.

"This partnership further strengthens and diversifies our exposure to a major player in the EV value chain and marks an important step in the execution of our strategy to set-up value creative partnerships across the battery value,” said Umicore  CEO Mathias Miedreich.

Thomas Schmall, group board member for technology at Volkswagen and chairman of the PowerCo supervisory board, noted that cathode material, an indispensable strategic resource for battery production, accounts for roughly 50% of overall cell value. “Immediate and long-term access to extensive capacity and thus affords a very clear competitive advantage,” he said.

Under the terms of the agreement, both partners will jointly control the production company and equally share costs, investments, revenues and profits. Umicore will license its intellectual property to the JV to underpin its technology leadership. 

The team-up is expected to offer advantages for both sides. It will provide Umicore with secured access, through firm take or pay commitments, to an important part of the European demand for EV cathode materials at guaranteed value creative returns, the company said. At the same time, PowerCo will gain cost-competitive access to Umicore’s sustainably sourced high-performance battery materials for its unified cell strategy in Europe.

At the contract-signing ceremony, Ralph Kiessling, EVP Energy & Surface Technologies at Umicore, said the JV will unlock significant cost and operational synergies within the Belgian group, while PowerCo said the link-up with the battery specialist will satisfy Volkswagen’s growing demand for battery-grade in terms of volume and at optimal cost.

Author: Dede Williams, Freelance Journalist