VW is preparing to jump across the Atlantic with e-car batteries

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– by Jan Schwartz

Hamburg (Reuters) – In the race to secure raw materials and production capacities for electromobility, Volkswagen is targeting North America.

The Wolfsburg-based group, which is planning to build six battery cell factories in Europe, is starting to look for a first location on the other side of the Atlantic. The world’s second-largest automaker after Toyota said on Thursday that Canada was “a logical option,” confirming information from the Reuters news agency. With the statement, Volkswagen started playing poker for billions in funding. Because the USA is advertising massive tax breaks for technologies for renewable energies such as electric cars.

Volkswagen boss Oliver Blume said on the occasion of signing an additional agreement with Canada: “The country offers high sustainability standards and ideal economic conditions.” The Canadian government has already proven to be a strong and reliable partner. This is just the beginning: The electric vehicle market in North America is at an inflection point. Volkswagen is determined to invest across the region to seize this historic opportunity. VW thus opened up space for speculation about a battery cell factory in the USA as well. “The framework conditions in North America are highly attractive. The most competitive location wins the race,” Schmall told Reuters. Canada is among other options on a shortlist of locations being considered for a North American plant. The battery subsidiary PowerCo, which is also considered a stock market candidate in the medium term, will shortly be holding detailed negotiations with all parties involved.

USA LURES WITH MASSIVE SUBSIDIES

The search for a location is interesting in light of the fact that the US government has created incentives for investments in its own country with the so-called Inflation Reduction Act and other industrial policy measures. EU countries fear the US’ $430 billion law on energy security and combating climate change will penalize European companies and encourage migration to the US. The Swedish battery manufacturer Northvolt is already considering shelving planned investments in a new battery plant in Schleswig-Holstein in favor of a factory in the USA. Irrespective of this, Volkswagen intends to significantly expand its e-car activities in the coming years.

The agreement with Canada also comes at a time when voices are increasing in Europe that see the expansion of electromobility at risk due to high energy costs. “If we don’t succeed in lowering energy prices in Germany and Europe quickly and reliably, investments in energy-intensive production or in new battery cell factories in Germany and the EU are practically no longer feasible,” wrote VW brand boss Thomas Schäfer recently on LinkedIn.

The group wants to set up six battery cell factories together with partners in Europe alone for the switch to e-cars and needs large quantities of raw materials for this. To this end, Volkswagen signed a declaration of intent on raw materials a few months ago during Chancellor Olaf Scholz’s visit to Canada. The additional agreement that has now been concluded on the search for a location for the first gigafactory in North America is based on this; a second one is being considered. On the sidelines of the Chancellor’s visit to Canada, Mercedes-Benz also signed a declaration of intent on a raw materials cooperation.

UMICORE BECOMES STRATEGIC PARTNER

For its battery plans, Volkswagen is expanding its cooperation with the Belgian materials technology group Umicore and on Thursday concluded a supply agreement for cathode material for future cell production in North America. In September, the two groups decided to set up a joint venture that will supply the European battery cell factories of the VW battery cell subsidiary PowerCo with key materials for the planned unit cell from 2025. Together, the partners are investing around three billion euros in setting up production capacities for battery materials. By the end of the decade, they want to produce cathode and pre-material for 160 gigawatt hours of cell capacity per year in Europe. This corresponds to an annual capacity for around 2.2 million electric cars.

These are now being supplemented by the extension to Canada. This involves a volume of up to 40 gigawatt hours per year in 2030, which according to VW corresponds to around 550,000 fully electric vehicles. Deliveries are scheduled to begin in 2027. Umicore is planning to build a factory for the large-scale production of cathode material in Canada from 2023 to supply several partners, Volkswagen announced. This would be the first work of its kind in North America.

(Report by Jan C. Schwartz; edited by Sabine Wollrab. If you have any questions, please contact our editorial team at [email protected] (for politics and the economy) or [email protected] (for companies and markets). )