Make Kitco Your Homepage

Volkswagen to 'get actively involved in the raw materials business'

Kitco News

Carmaker Volkswagen is contemplating a spin out of its battery division and sees a need to start sourcing the raw materials itself.

Chief Technology Officer Thomas Schmall was interviewed by Handelsblatt (translated from German). The story was published today.

In the interview, Schmall said its battery spin out will need to integrate vertically. Material costs are the driver.

"The new electrical world is also changing the structure of purchasing, our cooperation with suppliers. So far, we have mainly obtained our parts from suppliers who are the first in line, for example from the big players in the industry. In the battery field, however, we now have to go deeper into the supply chain, in other words to the upstream suppliers of the major suppliers. The decisive factor in battery cells are the raw material costs, their share is around 80 percent. So we have to take care of the raw materials right now.

"[We] are looking at the entire process chain from the mine to recycling. We have to get actively involved in the raw materials business. If the basic logic is that we do everything under one roof and manage the planned factories uniformly, the answer is yes. We want to turn the battery business decisively. We at Volkswagen want to steer the driver's seat and the operational business with the new factories. This also ensures that we can introduce the announced standard cell across all Group brands.

Source: Hadelsblatt

The company is looking for paternships for its battery spin out, noting that the cost of constructing cell plants is expensive. Hadelsblatt notes that Volkswagen and its partners intend to build six new gigafactories for cell production in Europe alone.

The Volkswagen Group delivered 9.3 million vehicles to customers worldwide in fiscal year 2020 and generated sales revenue of €222.9 billion (US$271 billion).

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.