Volkswagen says planned plant expansion will cost $34 billion

FRANKFURT Reuters - Volkswagen's planned European battery cell plants and securing vital raw materials will cost 30 billion euros $34 billion, according to board member Thomas Schmall, putting a price tag on the expansion for the first time.

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.

The 57 year old said that VW would not have to take the lead on funding and that it was not aiming for a 50-50 investment split.

It depends on the partnership model we will establish in the next few months. We need to control the technology roadmap, the timing, the costs, and availability to enable our roll out. Schmall oversees Volkswagen's ambitious plan to build six large battery cell plants in Europe by the end of the decade, a strategic pillar in its bid to overtake Tesla and become the world's top electric vehicles seller.

Sweden's Northvolt, the first plant in which Volkswagen owns a fifth, will start production of premium cells for the German carmaker from 2023. The second plant, to be built jointly with China's Gotion High-Tech in Salzgitter, is scheduled to start in 2025.

Four more plants are expected to be built by the end of the decade, most likely in eastern Europe, and two additional locations that have not been disclosed at the end of the decade.

Costs will range from 1 billion to 2 billion euros per plant while capacity will range from 40 to 80 gigawatt hours GWh depending on the chemistry as well as whether enough energy supplies are available, according to Schmall.

He said that there were some natural limits in the availability of utilities, energy, water.

Schmall said that Volkswagen had to make sure it gets enough raw materials, such as lithium and nickel, as part of the equation.

With cooperation announcements due in a few weeks, Volkswagen plans to submit its next five-year investment plan to the supervisory board on December 9, which requires a more proactive approach, according to Schmall.

You will see the full range, according to Schmall. Also, there is a range of fixed and mixed price contracts with suppliers. You have to tailor-fit solutions to specific raw materials. This requires making sure materials are procured sustainably, which includes transparency reports, supplier ratings, and efforts to phase out some materials, most notably cobalt.

Schmall said that the goal was to ensure that the full production chain is sustainable, and that production of electric vehicles alone was not enough for Volkswagen, which is aiming to be carbon neutral by 2050 at the latest.

He said that this brings us in this closed loop, showing you that we are taking care from the beginning to the end, from the mining process to the end of battery lives and car lives and recycling.