Cabot Inks Deal with VW's PowerCo, Fueling EV Battery Ambitions

BOSTON, MA – January 07, 2026 – Cabot Corporation, a global leader in specialty chemicals, has announced a significant multi-year supply agreement with PowerCo SE, the battery manufacturing subsidiary of the Volkswagen Group. The deal positions Cabot as a key supplier of advanced conductive materials for the automaker's ambitious electric vehicle (EV) battery production plans, marking a critical step in both companies' strategies to dominate the future of electric mobility.

Under the terms of the agreement, Boston-based Cabot will provide its high-performance conductive carbons and dispersions. These materials are essential components mixed into the battery's electrodes to enhance electrical conductivity, a function critical for improving the overall performance of the lithium-ion cells that power modern EVs. The partnership is expected to bolster Cabot’s growing presence in the battery materials sector while providing PowerCo with a stable supply of crucial components for its European gigafactories.

Volkswagen's Drive for Supply Chain Dominance

This agreement is a key puzzle piece in Volkswagen Group's broader strategy to vertically integrate its EV battery supply chain through PowerCo. Established in 2022, PowerCo is the centerpiece of VW's plan to secure battery cell production, reduce costs, and accelerate innovation. By taking direct control of battery manufacturing, the German auto giant aims to mitigate supply chain risks and gain a competitive edge in the fiercely contested EV market.

PowerCo is aggressively expanding its manufacturing footprint. Its first gigafactory in Salzgitter, Germany, began production in late 2025 and is slated to reach an annual capacity of 40 GWh. This facility serves as the blueprint for a global network, with massive new plants under construction in Valencia, Spain, and St. Thomas, Ontario. Together, these first three sites are projected to produce up to 200 GWh of battery cells annually, with Volkswagen aiming for a total European capacity of 240 GWh by 2030.

At the heart of this industrial strategy is the "Unified Cell," a standardized prismatic cell format designed to be used in up to 80% of Volkswagen Group's EVs. This flexible design can accommodate different battery chemistries, from high-performance Nickel-Manganese-Cobalt (NMC) to more cost-effective Lithium Iron Phosphate (LFP), allowing VW to tailor battery performance and cost across its vehicle lineup. Securing a reliable supply of high-quality materials, like the conductive additives from Cabot, is fundamental to the success of this large-scale, standardized production model.

The Unsung Heroes of Battery Performance

While consumers focus on range and charging speed, the microscopic materials within the battery cell are the unsung heroes enabling these advances. Cabot's conductive carbons create a complex electrical network within the anode and cathode, allowing electrons to move more freely. This improved conductivity translates directly into tangible benefits for EV owners: higher energy density for longer driving range, faster charging capabilities, and extended battery lifespan.

"We are proud to collaborate with one of Europe’s foremost EV battery manufacturers to deliver innovative solutions that meet the evolving demands of the electric vehicle market," said Jeff Zhu, an executive vice president at Cabot. "This agreement positions us as one of the leading conductive materials suppliers in the European EV battery market. Furthermore, it reflects the strength of our technology and our ability to scale production to meet growing global demand."

The market for these additives is booming, with projections showing it could double to over $4 billion by 2033. The industry is rapidly moving toward even more advanced materials, such as carbon nanotubes (CNTs), which offer superior conductivity at lower concentrations. Cabot's ability to provide high-performance, scalable solutions places it at the forefront of this technological shift.

A Traditional Chemical Giant's Green Transformation

The deal with PowerCo represents a significant milestone in Cabot's strategic pivot toward the clean energy sector. For over a century, the company has been a leading producer of carbon black for traditional applications like tires and industrial rubber products. Now, it is successfully leveraging its deep expertise in carbon science to capitalize on the explosive growth of the battery materials market.

This partnership reinforces Cabot's position against key competitors like Imerys and Orion Engineered Carbons in the high-stakes race to supply the EV industry. The company has stated the agreement will contribute "meaningfully" to the growth of its Battery Materials segment, a key focus of its recent capital expenditure and strategic initiatives. For fiscal year 2026, Cabot has projected capital expenditures of up to $250 million to support its growth plans, which will undoubtedly include scaling up production to meet the demands of major partners like PowerCo.

This strategic evolution demonstrates how established industrial players can adapt their core competencies to become critical enablers of the green transition, turning deep-rooted material science knowledge into a powerful engine for sustainable growth.

A Partnership Forged in Sustainability

The collaboration is further strengthened by a shared commitment to sustainability. PowerCo has made environmental responsibility a cornerstone of its mission, planning for all its gigafactories to run on 100% renewable energy and be designed for closed-loop recycling of raw materials. A key innovation is PowerCo's pioneering "dry coating" process for electrode manufacturing. This technique, a major departure from the industry-standard wet-slurry method, is expected to reduce energy consumption by 30% and eliminate the use of harsh chemical solvents.

This focus on a clean manufacturing footprint aligns perfectly with Cabot's own demonstrated commitment to sustainability. The company recently earned its fifth consecutive Platinum rating from EcoVadis, a distinction that places it in the top 1% of all companies assessed for their environmental and social performance. By joining forces, Cabot and PowerCo are not just building a supply chain; they are building a more sustainable foundation for the entire EV ecosystem, from the sourcing of raw materials to the end-of-life recycling of the battery. This partnership exemplifies a powerful trend where technological innovation and environmental stewardship are increasingly intertwined, driving the automotive industry toward a cleaner future.