VW teams for European battery supply chain

VW teams for European battery supply chain

Business news |
By Nick Flaherty

Volkswagen has signed three strategic deals in battery materials and technology, creating two new companies.

The deals with materials technology group Umicore, battery specialist 24M Technologies, and German lithium supplier Vulcan Energy Resources are intended to boost the in-house volume production of even more sustainable batteries.

The group plans to build six battery gigafactories in Europe by 2030 and needs to ensure the supply of materials and technologies. The deals are part of a move to bring more of these key technologies in-house to avoid the supply chain problems highlighted by the chip shortage.

“Volkswagen is implementing its battery strategy very consistently and at a high pace. Volkswagen’s unified cell must be at the forefront of performance, costs and sustainability right from the start. With our new partners, we are one step closer to reaching this goal. Together, we will focus on key parts of the battery value chain and develop cutting-edge technologies,” said Thomas Schmall, Member of the Board of Management of Volkswagen Group for Technology and CEO of Volkswagen Group Components.

The joint venture with Umicore will supply Volkswagen’s European cell factories with cathode materials. This is the next logical step towards vertical integration of the supply chain, having already decided to set-up large-scale, in-house production of the unified cell.

The intention is to gradually ramp up the JV’s production capacity, starting in 2025 with initial production of 20 GWh for the Volkswagen gigafactory in Salzgitter, Germany. The ultimate goal is to reach annual production capacity of up to 160 GWh by the end of the decade or, in other words, an annual production capacity to power approximately 2.2 million BEVs.

One key pillar is establishing a long-term partnership that includes the sharing of investments and having a framework to develop next generation technologies, among other things. The joint venture aims to build up precursor and cathode material production capacities in Europe, and sustainably securing responsibly sourced raw material capacities at competitive prices.

“We are very pleased to become a long-term partner for Volkswagen in achieving its ambitious e-mobility strategy in Europe and in bringing our long-standing and proven expertise in rechargeable battery materials to this unique joint venture,” said Mathias Miedreich, CEO of Umicore. “The complementarity of our extensive technology, innovation and industrial know-how, will provide a strong framework to develop next generation battery material technologies, giving us a considerable first-mover advantage in this fast-growing market.”

The two companies are also looking at additional elements of recycling and refining into the scope of the joint venture at a later stage.

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Volkswagen is also investing in US start-up 24M, a spin-off from the Massachusetts Institute of Technology (MIT). The goal is to industrialize the 24M technology, a semi-solid process that is an improvement over the dry coating process, in the automotive battery area.

Next: slashing battery costs

The aim of the 24M deal is to slash the cost of future battery production by reducing material usage and eliminating several steps from the conventional production process. A new Volkswagen-owned subsidiary will further develop and upscale the technology for automotive applications based on the 24M technology.

“The 24M mission is to develop a better, cleaner energy future powered by our technology,” said Naoki Ota, President and CEO of 24M. “Our relationship with Volkswagen significantly expands the 24M ecosystem. Their investment, collaborative development and ability to scale globally will accelerate our manufacturing platform, thereby replacing the conventional manufacturing process and fast tracking electric vehicle adoption.”

Prospective benefits include up to 40 percent less production area, considerable savings on investment and more efficient product recycling, as well as the reduction of the CO2 footprint of battery production. The process will be in large-scale production in the second half of the decade.

The third deal with Vulcan Energy Resources secures the supply of CO2-neutral lithium from the Upper Rhine Valley in Germany. The binding contract focuses on providing lithium hydroxide over a period of five years starting from 2026. The material will be used for future in-house cell production both in Germany and Europe. Further aspects of a possible strategic partnership are under negotiation.

“Through this agreement, Vulcan Energy will become a major enabler of Volkswagen’s world-leading target to produce carbon neutral EVs, including all raw materials in the battery supply chain,” said Francis Wedin, managing director of Vulcan. “We look forward to working closely with Volkswagen Group to build sustainable, local lithium supply for the German and European automotive sector.”

Vulcan is currently developing a project to produce CO2 free lithium in the Upper Rhine Valley using a local and lithium-rich geothermal brine. Its Zero Carbon Lithium project aims to establish a sustainable and regional source of lithium from Europe’s largest deposit. The production process does not require fossil fuels or evaporation ponds.;;

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