VW to Reveal How Much Its Future Revolves Around Batteries
Volkswagen AG will dedicate three hours Monday to briefing investors on the batteries that will power the world’s largest electric-car fleet.
The “Power Day” event starting at 1 p.m. Central European Time will dive deeply into VW’s strategy for securing the cells and packs replacing the tried and true internal combustion engine. The carmaker aims to at least double its share of deliveries that are fully electric this year, which could bring it within striking distance to Tesla Inc.’s EV sales.
The event is the third battery-related showcase by a major automaker in the last year, after General Motors Co.‘s in March 2020 and Tesla’s in September. The companies are competing to win over consumers still driving combustion cars and prove they have both the partners and internal expertise to ramp up production.
“Batteries are the new battleground,” UBS Group AG auto analyst Patrick Hummel said in a webcast last week.
Reducing battery costs will be key to improving slim returns on early electric cars, particularly for mass-market models. The expected rise in demand is also sparking concerns about supply bottlenecks for raw materials. Nickel is Tesla’s biggest concern for scaling production of lithium-iron battery cells, Chief Executive Elon Musk said last month.
Click here for Bloomberg’s TOPLive blog of VW’s “Power Day”
Given VW’s plans to make some 26 million fully electric cars by 2030 and around 7 million hybrid vehicles, batteries are a make-or-break matter of importance. Two years ago, the company said it would need more than 150 gigawatt hours of annual battery capacity for Europe in 2025 and roughly the same amount in Asia.
“VW was early to lock in supply agreements with the major battery manufacturers,” said John Goetz, managing principal at Pzena Investment Management Inc., a New York-based firm with $46 billion under management.
Here’s a regional overview of what VW has shared already about its battery strategy:
- VW’s main supplier is LG Chem Ltd.’s spun-off company LG Energy Solution Ltd., which operates a large factory in Poland.
- The automaker has formed a joint venture with Swedish startup Northvolt AB to built a factory in Germany. Production is slated to start 2024.
- VW has a deal to purchase batteries from Samsung SDI, though there are concerns the manufacturer might struggle to fulfill planned volumes in Europe.
- South Korea’s SK Innovation Co. Ltd. also has been confirmed as a supplier in Europe.
- VW plans to purchase batteries from SK Innovation for the ID.4 SUV it will produce next year in the U.S., but a patent dispute with rival LG risks undermining the supply deal.
- The automaker was an early backer of QuantumScape Corp., the U.S.-listed firm working on solid-state batteries that might offer an alternative to widely used lithium-ion technology.
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