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VW expects battery, raw material drive to cost up to $34 billion -Breaking

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© Reuters. FILE PHOTO – A brand new Volkswagen logo is revealed at Volkswagen headquarters Wolfsburg on September 9, 2019. REUTERS/Fabian Bimmer/File Photograph

By Christoph Steitz

FRANKFURT, Reuters – Volkswagen (DE) plans to build European battery cells and secure vital raw materials. The expansion will run for as high as 30 billion Euros ($34 billion), Thomas Schmall (board member) said.

Schmall, who is in charge of technology at Europe’s largest carmaker, said in an interview at  the  Reuters Next conference that Volkswagen would seek outside partners to fund it.

According to the 57 year old, “We are discussing 25 to 30 Billion (euros)…. This includes the vertical chain for raw materials not the factories.” He added that VW will not be required to finance the project and would not seek a 50/50 split.

It all depends on what partnership model we establish over the coming months. We’re open to discuss it. It’s important that we have control over… technology roadmap, costs, timing and availability in order to allow our rollout.”

Schmall oversees Volkswagen’s ambitious plan for six large European battery cells plants by the end the decade. This strategic pillar is crucial in the company’s bid to surpass Tesla (NASDAQ:), and be the top-selling electric vehicle seller in the world.

The first Swedish plant to have Volkswagen’s fifth production cell is Northvolt in Sweden. Production premium cells will begin at the German automaker starting 2023. To be completed in cooperation with China’s Gotion High-Tech Salzgitter in 2025 is the second plant.

By the end of this decade, four additional plants will be added, most likely to Spain and Eastern Europe. Two other places have yet not been identified.

Schmall stated that costs will vary from 1 billion to 2 million euros for each plant, and capacity can range between 40 to 80 gigawatts (GWh), depending upon the chemistry used as well as availability of energy resources.

He said, “We have natural limits on the availability utilities, energy and water.”

CLOSED LOOP

Schmall stated that production is just one aspect of the equation. He also said that Volkswagen had to ensure it has enough raw materials like nickel and lithium.

This calls for a proactive approach. Schmall indicated that Volkswagen is looking to form partnerships. Announcements of cooperation are due “in the coming weeks”.

Volkswagen plans to present its five-year investment plan on Dec. 9 to the supervisory boards. It is exploring a variety of strategies that could include becoming a shareholder at a mining company.

Schmall stated that “you will see the whole range.” He also spoke of fixed- and mixed-price contracts with suppliers. You must tailor-fit your solutions to particular raw materials.

This requires ensuring that all materials are purchased sustainably. Volkswagen has transparency reports, ratings from suppliers, and an effort to phase out certain materials such as cobalt.

Schmall stated that, in the end, Schmall was aiming for sustainability of the entire production chain. He also said that electric cars were not sufficient to produce Volkswagen’s carbon-neutral goal by 2050.

He said, “And all this brings us into this closed loop. I hope to show you that from the start on, the mining process is sustainable until the end of car life and battery lives, and recycling.”

To watch the Reuters Next conference please register here https://reutersevents.com/events/next

($1 = 0.8917 euros)

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