Volkswagen expands battery cell production for electric cars and also plans investments in raw material mines. “The bottleneck in raw materials is the mining capacity. That’s why we have to invest directly in mines,” said CTO Thomas Schmall (59) to the Reuters news agency in an interview on Friday at the laying of the foundation stone for the new gigafactory in Valencia, Spain.
Production of the so-called unit cell from VW is scheduled to start in Valencia in 2026. Schmall did not name the names or locations of mines in which Volkswagen could participate. The Wolfsburg-based carmaker is currently building a network of battery factories to cover the growing need for batteries with the number of electric cars.
Up to six storage plants are to be built in Europe. Three locations have already been decided: Salgitter, Valencia and the Canadian province of Ontario. According to earlier information, Volkswagen wants to set up a battery supply chain there and plans to invest in mining companies. In Skelleftea in Sweden, the group has also concentrated the production of premium cells with the battery specialist Northvolt.
Goal: Independence from Asia
As a result, the Wolfsburg-based company wants to become less dependent on suppliers from Asia, who dominate the battery market. Europe’s largest car company has bundled its activities in its subsidiary PowerCo, which organizes the procurement of raw materials and the expansion of battery cell plants worldwide. The aim is to expand production in order to reduce quantities. This is the only way to make e-cars possible at a price of less than 20,000 euros, which VW is currently working on to make electromobility suitable for the masses.
Also the US electric car pioneer Tesla is struggling with battery raw materials such as lithium, cobalt and nickel becoming more expensive and, according to media reports, is considering entering the mining business.
“It’s a challenge to keep reducing battery costs,” Schmall said. “With the PowerCo we use all instruments, from the purchase of raw materials to new technologies and scaling.” PowerCo focuses on Europe and North America for the in-house production of battery cells. In China the carmaker sources cells from local suppliers who dominate the battery market. “Worldwide, in-house production and purchase will be divided roughly half-half,” said Schmall.
Ford relies on electrical kits from Volkswagen
The Chief Technology Officer announced that Volkswagen would also sell battery cells to other customers. “Perspectively, we also want to enter the third market business.” Schmall assumes that there will be a few global standards for batteries in the future. “We want to set one of these standards through our large volumes and third-party market business.”
VW already has a major customer in the future: ford relies on the technology from Wolfsburg for e-cars in Europe. In September, production of an electric SUV based on the kit developed by Volkswagen is scheduled to start at the US carmaker’s Cologne plant. A second model is to follow in 2024. Ford intends to double the volume to 1.2 million units over a period of six years. The Indian car manufacturer Mahindra also makes use of Volkswagen’s electrical kit.
“Master core technologies”
When building up the battery business, you don’t have to do everything yourself, emphasizes Schmall. But you want to master the core technologies in order to remain independent. “At Volkswagen, we have mastered the industrialization of technologies quite well. We don’t start at the very bottom of the learning curve, but rather buy know-how, which gives us speed.”
In battery chemistry, for example, Volkswagen works with Gotion and has a stake in the Chinese company. Development orders are also to the Chinese world market leader CATL and SDI from South Korea.
CATL has big plans in Europe. So far, many battery cells for German e-cars have been transported by ship China – now the Chinese battery giant also supplies its batteries from central Germany. In Thuringia, a cell factory for up to 30 million battery cells per year from CATL went into operation – earlier than corresponding large-scale projects in the German automotive industry.