Umicore, a Belgium-based company and the battery unit of the Volkswagen Group, PowerCo, have formed a joint venture with an aim to invest around $2.9 billion to build a significant supply chain for sustainable batteries. The two companies will jointly control the venture and share costs, investments, revenues, and profits equally under the terms of the agreement.

The long-term collaboration calls for the cathode and precursor materials in Europe, which are critical components and central to the creation of battery value. The joint venture will begin with material for 40 GWh of capacity by 2026 at Volkswagen’s first battery plant in Salzgitter, Germany. By 2030, the carmaker intends to erect six battery facilities in Europe with a combined capacity of 240 GWh.

Umicore will later supply refining services to PowerCo, with the objective of including refining and battery recycling elements. Additionally, Umicore and PowerCo will work together to source raw materials in a sustainable and responsible manner. By 2025, PowerCo’s European battery cell factories will receive essential materials from the partnership. By the end of the decade, the partners intend to be able to generate cathode materials and their precursors for 160 GWh of annual cell capacity. This would equate to a production capacity of 2.2 million completely electric automobiles per year.

REGlobal’s Views: Demand for batteries is increasing on a massive scale and the surge is likely to continue owing to not only the growing EV market but also requirement of energy storage for renewable energy integration. Thus, this is an ideal time to invest in not only battery manufacturing but also the materials required for making these devices.