Volkswagen’s battery strategy is gathering pace with the vehicle OEM securing materials deals to supply its European lithium-ion cell production and investing in a US battery manufacturing process firm.
The first was to increase precursor and cathode material production capacities in Europe through the establishment of a joint venture with Australian firm Umicore.
The firms plan to gradually ramp up precursor and cathode material production capacity from 2025 with an initial annual production of 20GWh of materials for Volkswagen’s plant in Salzgitter, Germany.
Annual production capacity would then grow to 160GWh— enough to power around 2.2 million electric vehicles— by the end of the decade.
The JV’s portfolio offering will cover next-generation technologies, including high-nickel chemistries.
Thomas Schmall, member of the board of management of Volkswagen Group for Technology, and CEO of Volkswagen Group Components, said: “Volkswagen is implementing its battery strategy very consistently and at a high pace.
“Teaming up with Umicore enables us to establish a state-of-the-art supply chain in Europe as we share common values such as responsible sourcing of raw materials, as well as closed-loop thinking.”
In the context of the JV, Umicore and Volkswagen will collaborate on the “sustainable and responsible” sourcing of raw materials, with both parties planning to include elements of refining and battery recycling into the JV at a later stage.
Lithium offtake agreement
Volkswagen Group has also secured a binding lithium offtake deal with Vulcan Energy.
The deal is for the purchase of a minimum of 34,000 tonnes and a maximum of 42,000 tonnes of battery grade lithium hydroxide over the duration of the agreement, which is for an initial five-year term.
Commercial delivery of the material is expected to begin in 2026.
Volkswagen Group and Vulcan have also agreed to a first right of refusal to invest in additional capacity in the latter’s Zero Carbon Lithium Project, which is a lithium hydroxide monohydrate chemical product from its geothermal lithium brine project in the Upper Rhine Valley, Germany.
Investment in 24M Technologies
Volkswagen announced this week it would invest in Cambridge, US-based battery start-up 24M, with the goal of industrialising the latter's semi-solid process that improves the dry coating process, in the automotive battery area.
The target is to generate "considerable cost optimisation" in future battery production by reducing material usage and eliminating several steps from the conventional production process.
For this purpose, a new Volkswagen-owned subsidiary will further develop and upscale the technology for automotive applications based on 24M intelectual properties.
24M President and CEO, Naoki Ota, said: “[Volkswagen's] 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% less production area, considerable savings on investment and more efficient product recycling, as well as the reduction of the CO2 footprint of battery production.
Implementing the process in large-scale production is targeted for the second half of the decade sunject to customary closing conditions allowing the transaction.