Published on March 14th, 2018 | by Steve Hanley0
Volkswagen Has Lined Up $25 Billion In Battery Cells & Components
March 14th, 2018 by Steve Hanley
The news out of Germany today is positive for EV fans. Volkswagen, despite its continued faith in diesels and despite being embroiled in ongoing disputes with German diesel car owners, is pushing ahead with plans to introduce an electrified version of all 300 models it sells by 2025. To make that happen, it has committed to buying $25 billion worth of batteries and associated components from three global battery manufacturers — Samsung SDI, LG Chem, and Contemporary Amperex. Müller says his company expects to name a battery supplier for the cars it builds in the US in the near future.
Contemporary Amperex has just announced that it has narrowed the search for a location to build a European battery factory to three countries. The focus on outside suppliers underscores the developing trend among investors to purchase holdings in component suppliers rather than vehicle manufacturers as the market for electric vehicles expands. Volkswagen tells Bloomberg it intends to increase the number of factories configured to build electric vehicles from 3 as of today to 16 by 2022. Its goal is to sell 3,000,000 electric cars a year by 2025.
CEO Matthias Müller says that beginning next year the company, which has 12 brands under its corporate umbrella, will be rolling out a new battery powered model “virtually every month. This is how we intend to offer the largest fleet of electric vehicles in the world. We have pulled out all the stops over the past months to implement the Roadmap E swiftly and resolutely,” Mūller told a news conference in Germany yesterday, according to a report by Reuters.
Volkswagen is the largest producer of cars in the world, but it can’t rest on its laurels if it wants to remain King of the Mountain. 80% of its sales are in Europe and China, two markets where more rigorous emissions rules and government mandates are forcing manufacturers to embrace electric cars. Volkswagen is struggling to generate enough revenue to pay for all the investment it is making in zero emissions vehicles while keeping its profit margin close to the 7% average it is accustomed to.
Despite pressure from its workers, Volkswagen has decided it prefers to buy batteries from outside suppliers rather than make them itself. “Building up expertise and mastering the technology does not necessarily imply that we want to start large scale assembly of batteries ourselves,” Müller told the press. “Others can do it better than we can.”