Critical Minerals and Energy Intelligence

VWs Battery Ambitions

Volkswagen has announced plans to invest directly in mines, via its batter division, PowerCo, in order to lower the cost of battery cells and become a global battery supplier. Last year, automakers got a strong taste of just how volatile battery metal supply can be and I guess they didn’t like the flavor! In an interview with Reuters, VW board director, Thomas Schmall, said “The real bottleneck isn’t cell production—it’s mining.”

Through PowerCo, VW aims to meet half of its own battery needs with factories in Europe and North America, and also to sell cells to others, starting with Ford. PowerCo will supply batteries for 1.2 million Ford vehicles being built in Europe using VW’s MEB electric platform. VW is also already working on partnerships with mining companies in Canada, where its first North American battery plant is being built. Schmall kept quiet on whether direct mine investments were imminent or which other regions are being considered, saying VW will wait for market conditions to settle before diving in.

“There will only be a handful of battery standards in the future,” Schmall told Reuters. “With our volume and our third-party sales, we want to be one of them.”

Volkswagen is not the only one entering the game in this way. Most carmakers are making moves to secure lithium, nickel, and cobalt through sourcing agreements, though admittedly only a few have gone as far as taking actual stakes in mines.

PowerCo, which only got off the ground in 2022, is aiming at over €20 billion in annual sales by 2030. But production isn’t expected to kick off until 2025 in Salzgitter, Germany, followed by Spain in 2026 and Canada in 2027. In my opinion, that is a tight, tight timeline. However, it’s worth noting that a major chunk of PowerCo’s team comes from Asia, the home of battery heavyweights like CATL, LG Chem, and Samsung SDI.

It’s also going to cost a lot of money. In its five-year, €180 billion spending spree, Volkswagen has earmarked up to €15 billion for three battery factories and raw materials sourcing. For now, the company says it’s locked in enough materials to get through 2026 and will be determining next steps shortly. Good luck VW, you’re going to need it.

Anthony Milewski

Chairman, Nickel 28 Capital

Disclaimer

The Oregon Group maintains full editorial control over all content published on this website. While sponsored and advertised placements may be featured, the content remains the sole opinion of The Oregon Group. The author may receive compensation or remuneration for providing content, but all statements and expressions are made independently and are not influenced by sponsors or advertisers. From time to time, The Oregon Group and its directors, officers, partners, employees, authors, or members of their families, as well as persons who are interviewed for articles on this website, may have a long or short position in securities or commodities mentioned and may make purchases and/or sales of those securities or commodities in the open market or otherwise. By accessing and using this website, readers are cautioned to assume that each of the foregoing persons may have a financial interest in all companies and sectors mentioned on this website. Any projections, market outlooks or estimates herein are forward looking statements and are inherently unreliable., and any such statements are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur. Other events that were not taken into account may occur and may significantly affect the returns or performance of the securities or commodities discussed herein. The information provided herein is based on matters as they exist as of the date of preparation and not as of any future date, and The Oregon Group undertakes no obligation to correct, update or revise the information in this document or to otherwise provide any additional material. The information provided on this website is for informational purposes only and is not, directly or indirectly, an offer, solicitation of an offer and/or a recommendation to buy or sell any security or commodity, and the information provided on this website should not be construed as any advice or an opinion as to the price at which the securities of any company or commodity may trade at any time. The Oregon Group is a publisher of financial information, not an investment advisor. We do not provide personalized or individualized investment advice or information that is tailored to the needs of any particular recipient, and the information provided on this website is not and should not be construed as personal, financial, investment or professional advice. Readers are cautioned to always do their own research and review of publicly available information and to consult their professional and registered advisors before purchasing or selling any securities or commodities and should not rely on the information contained herein. Neither The Oregon Group nor any of its affiliates accepts any liability whatsoever for any direct or consequential loss howsoever arising, directly or indirectly, from any use of the information contained herein. By using the Site or any affiliated social media account, you are indicating your consent and agreement to this disclaimer and our terms of use. Unauthorized reproduction of this newsletter or its contents by photocopy, facsimile or any other means is illegal and punishable by law.