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Home Economy

VW to invest in mines, expand battery production

Nikola Kiš by Nikola Kiš
17 March 2023
in Economy
VW laying off thousands as part of green transition

Stuttgart, Germany - November, 16 2017: Volkswagen Golf GTE at electrical charging station

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Belgium, (Brussels Morning Newspaper) Volkswagen (VW) automotive company announced plans to invest in mines and expand battery production to cover half of its needs.

Thomas Schmall, VW Management Board member responsible for technology, pointed out in an interview with Reuters on Friday that the company wants its battery unit PowerCo to grow into a global supplier.

He noted that PowerCo plans to expand production capacities largely in Europe and North America, and meet half of VW’s needs in the long term.

“The bottleneck for raw materials is mining capacity – that’s why we need to invest in mines directly,” Schmall stressed. He reminded me that VW will build its first battery plant in North America in Canada, where it is partnering with mining companies.

Schmall did not say which expansion locations VW was eyeing, stressing that the information would be disclosed after the market settles.

“In the 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,” he noted.

PowerCo was founded last year and is aiming to reach 20 billion euros in annual sales by 2030. According to plans, the company will start production in Germany in 2025, followed by Spain in 2026 and Canada in 2027.

Pace of expansion

Schmall pointed out that batteries account for 40% of the cost of electric vehicle production, stressing that VW needs to expand its battery business quickly if it wants to make affordable vehicles.

In the next five years, VW is planning to invest roughly 15 billion euros in the three announced battery plants and sourcing of raw materials.

Schmall noted that the company has secured the supply of raw materials until 2026 and would decide in the coming months on plans to secure supply in the period after 2026.

“Bringing down battery costs further is a challenge,” Schmall pointed out and added, “we’re using all the instruments with PowerCo.”

He stressed that industry veterans from Asia account for approximately half the staff at PowerCo, which helped it to enter the industry prepared.

Few automotive companies have disclosed their stakes in mines, but many have closed deals to source materials needed for the production of batteries.

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