Volkswagen closes three new partnerships to amp up EV production

Volkswagen has entered into three new partnerships related to electric vehicle batteries, as the German automaker looks to transition its entire portfolio of cars, trucks and SUVs to zero-emission vehicles by 2040.

The three separate partnerships, all of which were announced Wednesday, are with materials technology group Umicore, battery specialist 24M Technologies and Vulcan Energy Resources, a company that is planning on opening a lithium brine project in Germany.

Volkswagen’s joint venture with Umicore will supply the automaker’s European battery cell factories with cathode materials, a key building block of lithium-ion batteries. The JV will have an initial production capacity of 20 gigawatt-hours, with the aim of scaling to up to 160 gigawatt-hours by 2030. The materials will feed VW’s planned Gigafactory in Salzgitter, Germany.

In addition, Volkswagen said it was investing in battery start-up 24M, which is developing a battery that has a semi-solid electrode. The MIT spin-out says its manufacturing process is faster and less capital-intensive than conventional lithium-ion batteries. VW did not disclose the size of its investment.

The final partnership with Vulcan includes a binding contract for what the companies describe as “carbon neutral” lithium sourced from Germany. The companies say it is able to have carbon neutral lithium because the brine extraction process it is using is more environmentally-friendly than traditional brine extraction and it will be processed in a plant powered by renewable energy.

Vulcan will supply the automaker with lithium hydroxide for five years from 2026.

All three agreements are part of Volkswagen’s plan to invest €30 billion ($34 billion) in electric vehicles. In Europe alone, VW said it would build six battery gigafactories by the end of the decade, with a production capacity of 240 gigawatt-hours overall.

Volkswagen is not the only major automaker moving swiftly to secure the battery supply chain. Earlier this month, General Motors announced a similar JV with South Korea’s POSCO Chemical to build a new cathode materials facility in North America by 2024. Meanwhile, Stellantis secured its own lithium intake agreement with Vulcan last month.

The slew of deals is notable not only because it marks a ramp-up in automakers’ plans to electrify, but because such deals could help reshape the global battery supply chain away from China. Currently, the majority of battery cathodes and anodes are manufactured in that country, according to Benchmark Mineral Intelligence. Around 75%, or 148 of 200, planned lithium-ion megafactories are also due to be located in China.