Talking about making electric cars is easy. Making electric cars is hard. Ever since Volkswagen announced it was getting into the EV game, plenty of skeptics have wondered aloud whether it was serious or just blowing smoke. They had every right to be suspicious. Time and again, the company made bold pronouncements that didn’t ever translate into actual products. It appears that’s about to change.
Battery Production In Europe
VW’s board of supervisors announced this week that it is prepared to invest €1 billion in a battery cell factory in Europe. The preferred location is Salzgitter in Lower Saxony, contingent on final negotiations with the government. The choice is not surprising as Volkswagen has already established a Center of Excellence in Salzgitter where pilot production of battery cells is scheduled to begin later this year. The company has recently bundled all its battery competencies, including recycling and R&D, in its Component Center in Salzgitter as well.
Supervisory Board Chairman Hans Dieter Pötsch said after the board meeting “We wish to expand our production capacities in Europe to support our growth plans” and that his company will “move forward with setting up a battery cell production facility in Europe under a partnership,” with SK Innovation, according to Electrive.
The Minister President of Lower Saxony, Stephan Weil, said “Today’s decision by the Supervisory Board marks a breakthrough for battery cell production in Lower Saxony,” adding that he is “very optimistic that battery cells can be produced in Germany at competitive conditions.”
Scania, the heavy truck division of Volkswagen Group, also had battery manufacturing news this week. It says it has signed a deal with Swedish startup Northvolt to purchase a “significant proportion” of the 32 MWh worth of batteries that will be produced at its factory every year, according to Reuters. Scania CEO Henrik Henriksson says “There will be a shortage of batteries for the automotive sector globally in the coming five to six years because there’s simply not enough capacity. So the more capacity we can get our hands on, the better we feel.”
Scania picked Northvolt because its business model of developing cells in collaboration with customers meant it could create batteries specifically for trucks, rather than relying on current models geared towards cars. Henriksson says electric cars tend to draw on their batteries for “a couple of hours a day, while our vehicles are running 24/7,” so batteries needed tailoring for different needs. “We’re participating in both the discussions about how to secure future capacity and volume commitments, and also, when it comes to equity and the like, the capital structure going forward.”
The China Syndrome
Bloomberg reports that Volkswagen is constructing two new EV assembly facilities in China, one in Anting and the other in Foshan. They are expected to begin production shortly after its first dedicated EV factory in Zwickau, Germany begins cranking out cars later this year. Combined, the 2 factories will have a capacity of 600,000 cars a year — more than double the capacity of Tesla’s new factory in Shanghai. The Zwickau factory will have a capacity of 330,000 cars a year.
“Volkswagen leads the competition on e-mobility,” Volkswagen CEO Herbert Diess told the audience at the company’s annual meeting in Berlin. “As a company we’ll make a success of the electric car — with the right products, superior underpinnings and global economies of scale.” For once, such bold pronouncements may actually turn out to be accurate.