Batteries for electric cars – level 3
Company Volkswagen plans to invest in mines to bring down the cost of battery cells, meet half of its own demand and sell to third-party customers.
Europe’s biggest carmaker wants its battery unit PowerCo to become a global battery supplier, as well as meet half its own demand with plants mostly in Europe and North America. The strategy aligns with a wider trend of carmakers seeking greater control over parts of the supply chain traditionally left to third parties, from energy generation to raw material sourcing, as they compete for scarce resources that they urgently need to meet electrification targets.
According to the carmaker’s board member, the bottleneck for raw materials is mining capacity, therefore it’s necessary to invest in mines directly. Acquiring batteries at a reasonable cost is a challenge for carmakers as they look to make electric vehicles affordable. Many carmakers have made deals with producers to source lithium, nickel, and cobalt and passed them onto their battery suppliers.
Difficult words: align (to come together in agreement or alliance), scarce (rare), bottleneck (a situation that causes a delay in a process or system).
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What opportunities and challenges does Volkswagen's strategy to invest in mines present to the industry?
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