Economies may be upended and consumer confidence wavering, yet there can be no pause in upfront investment for makers of battery materials. That’s because critical ecosystems of carmakers and suppliers are forming right now and cathode manufacturers need to make sure they are inside the tent.
Customers like VW and Mercedes are a demanding bunch. They want affordable cathodes that will enhance the range of their EVs, and traceable and sustainable materials. Increasingly, they also demand a much bigger say in the design and properties of a battery and are prepared to have skin in the game, Umicore CEO Mathias Miedreich said today.
The evolving, deepening relationship between OEM and supplier prompted Umicore to change tack and switch from a protective stance to opening its door to collaborating on expansion projects. The long-held belief that simply producing more cathode material is the winning formula is giving way to strategies for securing a supply chain, battery recycling, and ESG footprints.
“We have to embrace this ecosystem approach,” Miedreich told investors. “How to secure the supply chain is being dealt with at the CEO and the management board levels. They are willing to go into these partnerships without dilution of premiums.”
Umicore announced a dramatic increase in spending to more than EU5 billion over the next four years as the Belgian company prepares for a surge in electric vehicle demand. It wants a presence in North America, and to scale up recycling activities in Europe, all the while building a new plant to cover the emerging fuel-cell opportunity in China.
These days it’s hard to find any chemical company that isn’t touting some EV angle, whether it’s fluoropolymers for conductivity or plastics to lightweight the unit. Like Umicore, rivals like CATL, BASF and LG Chem are also ramping up investment.
Umicore is banking on partners topping up its EU5 billion investment plan. It’s looking to bankroll its share with the legacy cash-generating automotive catalysts, used in tailpipes to lower emissions. The internal combustion engine may be on its way out, but it will still generate EU3b for Umicore by 2030 as diesel and gasoline cars head toward the door and regulations tighten.
The next two years will be critical for securing contracts, and for announcements surrounding the qualification of Umicore’s products with several customers, Miedreich said. By 2030, just over one-third of cars will be electric. In 2021, that figure was 5%.
If Miedreich pulls all this off, Umicore expects to add EU5-6 billion to its topline by 2030, versus the EU4 billion in 2021. Having joined Umicore from automotive supplier Faurecia in 2021, he has the inside track on the EV space.