VW Wants to One-Up Tesla With a Next-Generation Battery 

(Bloomberg) -- Volkswagen AG plans to start trial production of solid-state batteries by 2023, putting pressure on Tesla Inc. to keep pace with the German giant’s spending on electric-car developments.

Volkswagen’s partner QuantumScape Corp. is making progress in developing technology that could make electric-cars cheaper and extend driving ranges, the carmaker’s Chief Executive Officer Herbert Diess said Wednesday at a press conference in Wolfsburg. The two companies plan to cooperate on producing batteries in the coming years, and if the pilot is successful, mass production could start as early as 2024.

The world’s biggest automaker intends to invest 34 billion euros ($39.7 billion) by 2022 to develop technology for next-generation vehicles. Projects include rolling out electric versions of all 300 cars, trucks and buses in its line-up plus adding an all-new set of battery-powered vehicles.

While Tesla is struggling to show it can make cars profitably as it transitions from a niche player into a mainstream manufacturer, Volkswagen has no problem financing its industry-leading spending. Cash flow from operating activities totaled 4.75 billion euros ($5.55 billion) in the second quarter, compared to 3.39 billion euros in research and development expenses.

VW has a small stake in QuantumScape, which as founded by former Stanford University researchers in 2010. The start-up is working on batteries that use an alternative to liquid electrolytes such as the lithium-ion technology used in most electric cars. Solid electrolytes are burn resistant and could potentially store more energy and provide more power to extend the range of electric vehicles.

The German manufacturer aims to assemble as many as 3 million electric cars a year by 2025. To equip those vehicles, Volkswagen will purchase more than $25 billion in batteries from Samsung SDI Co., LG Chem Ltd. and Contemporary Amperex Technology Co. Ltd. The company currently doesn’t plan to build its own “gigafactory” for batteries, Diess said.

©2018 Bloomberg L.P.