VW’s PowerCo and Belgian Umicore join forces in Ionway (Update)

The Volkswagen Group’s new battery subsidiary PowerCo and the Belgian materials technology group Umicore have established a joint venture for cathode and pre-material production in Europe. The JV is called Ionway. From 2025, it will supply PowerCo’s European battery cell factories with key materials from the Ionway factory in Poland.

By the decade’s end, the new partners want to produce cathode and battery production materials for 160 gigawatt-hours of cell capacity per year. According to Volkswagen’s estimations, this corresponds to an annual production capacity sufficient for around 2,2 million fully electric vehicles.

In a statement, Volkswagen refers to Ionway as the first partnership of its kind between a European carmaker and a leading global CAM manufacturer. In addition, “Both parent companies are deeply committed to scaling up the EU footprint in the e-mobility business by establishing regional, sustainable, and transparent battery supply chains.”

Based in Brussels

The joint venture will be based in Brussels. According to the statement, it will invest three billion euros to build up its activities around developing and producing cathodes and other primary materials.

With its headquarters in Brussels, Ionway will be close to Umicore’s headquarters, which is also in Brussels. PowerCo’s global headquarters are in Salzgitter, next to the company’s German battery factory, which has been under construction since July in partnership with Northvolt.

Cathode is key

VW sees the cathode material as the “central technological lever” for battery performance and the most critical cost factor for its own battery production.

Therefore, the long-term partnership with Umicore will focus on producing precursor and cathode materials in Europe, “which are of central strategic importance for battery value creation”. Under additional agreements, Umicore and PowerCo also intend to collaborate on sustainable and responsible sourcing of raw materials.

“Cathode material is an indispensable strategic resource for battery production, accounting for roughly 50% of the overall cell value,” says VW board member for technology Thomas Schmall. “Immediate and long-term access to extensive capacity is thus a clear competitive advantage. In addition, we are setting up a sustainable, transparent supply chain with high environmental and social standards, localizing value creation here in Europe.”

“This partnership is a strong signal of recognition of our product and process expertise and a testament to the success of our strategy to establish sustainable industrial-scale, closed-loop battery materials value chains in key regions,” Umicore CEO Mathias Miedreich is adding. “We support our customers on their path to electrification right from the start and are very pleased to partner with PowerCo and support Volkswagen in their fast transformation toward sustainable electric mobility.”

As of 2025

The establishment of the joint venture does not come as a surprise: Volkswagen had already announced such a joint venture in December 2021, but the final negotiations for an agreement were challenging and took their time. Last year, the initial production capacity of 20 GWh at the start of production in 2025 and the final capacity of 160 GWh were already mentioned.

Thomas Jansseune has been appointed as CEO of the new joint venture after having previously spent 22 years at Umicore. In his last role, he was responsible for Umicore’s New Business Incubation with projects in venture capital, solid-state batteries, decarbonization, battery recycling, and hydrogen electrolysis.

His statement on the official launch: “The foundation of Ionway sends a strong signal for the rollout of battery cell technology in Europe. We are convinced this company will provide some important building blocks with which the European Union can implement its Green Deal goals.”

Umicore has just opened its first own cathode material production in Nysa, Poland. It is easy to upscale the capacity of this plant following the copy-paste principle. The new factory is also very near to several VW car assembly plants.

PowerCo is currently building the first battery factory in Salzgitter, and another identical plant will be built in Sagunt near Valencia. In addition, the unit cell is also to be produced at Northvolt in Sweden, and an as yet unspecified location in Eastern Europe is also planned. No further details have yet been given for the PowerCo battery factories five and six.

Poland

Ionway has finally identified its first site for the production of cathode materials. The new plant will be built in Nysa, Poland, and will be adjacent to Umicore’s existing cathode materials plant. Construction is scheduled to begin as soon as the approval process is completed.

In September 2022, Umicore opened its own cathode material production in Nysa, Poland. Among the customers for cathode material is ACC, the battery joint venture of Stellantis, Total, and Mercedes-Benz. Umicore is running this project on its own in parallel with Ionway’s plans, even though there are, of course, advantages in logistics and personnel recruitment from locating both projects at the same site.

According to current information, 900 jobs will be created at Ionway by the end of the decade. Site preparation, planning, and permitting are currently underway.

The decision to locate the plant was not only made because of the existing Umicore plant, VW also cites in a statement the “strategic location with access to renewable energy sources for production as well as on qualified, skilled labor and the support of the Polish government”. The government is supporting the factory with € 350 million in cash grants.

With Umicore’s CAM plant in the neighborhood, the Ionway plant will also be able to benefit from access to raw materials from Umicore’s refineries in Finland.

Price battle

PowerCo will gain access “to a significant extent and at competitive prices” to sustainably sourced, customized battery materials for the group’s unit cell and benefit from the partner’s production know-how.”

PowerCo CEO Frank Blome commented: “Through Ionway, PowerCo reaches another milestone of our strategy to vertically integrate the battery supply chain. Together with our trusted partner, Umicore, we source our own key cell production materials at reasonable prices. Secure access allows PowerCo to supply cost-competitive battery cells to Volkswagen Group for years to come ‒ enabling its brands to offer attractive, affordable EVs to its customers.”

In return, Umicore secures access to a significant share of the European market for cathode materials for electric vehicles “through binding take-or-pay agreements”. Umicore shareholders feared that the profit margins for the company wouldn’t be sufficient as VW is renowned as a tough negotiator. That’s why there is this sort of production insurance.

Umicore’s intellectual property and know-how will be available to the joint venture through a licensing agreement to secure its position as a technology leader. Umicore CEO Miedreich insists that the estimated operating profit margins will be in line with the impressive 20% he promised his investors last summer, explaining a new strategy for the company.

He adds: “Ionway is a start-up with a significant head start because our partnership is built on solid foundations with Volkswagen’s PowerCo and Umicore, key players in the electric mobility transformation. Ionway will no doubt grow into an industry reference in e-mobility, boosting innovation, creating hundreds of highly skilled jobs, and will make the energy transition happen.”

No exclusivity

The deal with Volkswagen is not exclusive. Already in April, Umicore set up an agreement with ACC, the battery consortium in which Mercedes-Benz, Stellantis, and TotalEnergies are participating. Here, the total amount of batteries to be equipped with Umicore materials will be 700 000 per year.

The key to Umicore’s recent successes in the field is its broad range of products. Those are aimed at future battery generations, where other, far cheaper materials can replace expensive materials like nickel. Umicore can easily provide the cathode materials for these promising solid-state batteries.

Belgian Umicore has secured its place in the battery production chain for a longer time. When everything is running as foreseen, it will provide half of the European car production with important materials representing at least half of the cost of a battery, representing almost half of the price of a battery electric vehicle.