Volkswagen Launches Battery Cell R&D And Pilot Production


Is this a step towards a large-scale battery assembly line?

Yes, it is. The required knowledge is being researched. The Group is investing almost one billion euros to set up its own 16-gigawatt hour battery cell factory with its joint venture partner Northvolt.

Why doesn’t Volkswagen just buy the batteries from suppliers?

Worldwide, Volkswagen has a high demand for battery capacity: 150 gigawatt hours in Europe and the same amount in Asia. Volkswagen Group covers the volume for the first wave of e-vehicles with long-term supply contracts with competent partners. The strategic battery suppliers are LG Chem and SKI for Europe and CATL for China. SKI will also supply the battery cells for the US market.

At present, there are only 20 gigawatt hours of capacity available in Europe. This means that there is an enormous value creation potential for battery cell assembly in Europe, so that sufficient capacities are available. In addition, it makes no sense logistically or economically to supply large volumes for series production over long distances. Proximity to the production sites is crucial. But Volkswagen will also continue to work with its suppliers in the long-term to ensure a sufficient supply of battery cells.

What are the advantages of manufacturing in Europe?

Since the volumes of e-vehicles are currently still manageable, imports from Asia have been sufficient. If e-mobility takes off, then cells must be manufactured where the vehicles are built. Current capacities do not cover what the market will need in the future. The establishment of assembly facilities in Europe is therefore an important economic and industrial policy issue for the future of e-mobility.

What are the political challenges in developing battery cell production in Germany or Europe?

There are strategic, economic and employment criteria and framework conditions. Decisive criteria for the choice of location are competitive wage costs, favorable tax conditions and – due to the high electricity demand in cell assembly – competitive energy prices. The availability of electricity from renewable energy sources is another relevant factor in making electric vehicles truly sustainable: This would be a prerequisite for battery production being in line with the Volkswagen Group’s climate targets.

What are the economic and political parameters that would make production in Germany attractive for Volkswagen Group?

The attractiveness of potential German locations can be improved by various steps. For example, an exemption from the EEG levy, support for the granting of investment aid and infrastructure measures, measures such as the granting of special depreciation allowances or tax advantages and, last but not least, state support for training or retraining in the region concerned would be conceivable. If the overall package were coherent, Germany would be Volkswagen Group’s first choice for battery production.

What is Volkswagen investing in the E-offensive?

One third of the planned development investments will go into electromobility, digitization and new mobility services, totaling around 44 billion euros. Of this total, the Group will spend 30 billion euros exclusively on e-mobility. The joint ventures in China will invest another 15 billion euros.

What is the advantage for the customer?

Volkswagen brands not only want to offer their customers the best e-vehicles, but also at competitive prices. By 2028, almost 70 new e-models will have been produced across the Group; a total volume of 22 million battery electric vehicles across all brands and kits (MEB, PPE). For the MEB alone, Volkswagen brand is planning 15 million electric cars on the new electric platform by 2028. This gives the MEB the potential to become the largest and most powerful e-platform in the industry and to become a globally recognized standard. The MEB will also be used by other Group brands, of course. And the platform will be accessible to external partners such as Ford, enabling higher economies of scale. Each additional model reduces costs and increases profitability.

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