Volkswagen revealed a lot about its battery plans today. I’m going to try to adequately summarize here what it said and what that means. I’m sure it won’t be a perfect analysis, so feel free to help me out down in the comments with what I missed (or perhaps even got wrong).
I’m including two dozen screenshots from Volkswagen’s presentation here. Overall, the message seems to be the same as Tesla’s from Tesla Battery Day: a series of different steps will together bring down battery costs by 30–50% (and in some cases, the steps seem to be identical to what Tesla presented last year). Here’s a comparison of Volkswagen’s summary chart on how it will cut battery costs and a GIF of Tesla explanation of the same thing that our own Chanan Bos put together using 5 Tesla Battery Day images.
Overall, Volkswagen intends to reduce battery cell costs in low-cost, entry-level vehicles by 50%, much of that cost reduction coming from a switch in chemistry that Tesla has also undertaken for its lower-range Model 3 produced in China. I’ll come back to that in a minute. Mainstream, high-volume electric vehicles will get a 30% battery cost reduction without such a hit to the range.
Just to make one more generic point, it is clear Volkswagen put a ton of work into preparing this presentation, including several shots from inside or above factories and numerous pre-recorded presentations from different execs in the corporation. This brings a lot more transparency to what Volkswagen is doing, and I think raises investor confidence. I presume that was a key part of the impetus for this overall presentation, or Power Day. (Full disclosure: I own shares of Volkswagen [VWAGY].)
From an eagle’s perspective, Volkswagen is planning 6 battery gigafactories of 40 gigawatt-hours (GWh) each in Europe, for a total of 240 GWh of production capacity by 2030. Those of us who have been in the industry long enough probably remember that when Tesla first introduced its gigafactory concept, the plan was a 35 GWh facility. Volkswagen is now planning six 40 GWh battery factories across Europe. In any regard, if you are an EV enthusiast, I think that’s a big score. Even if you are a hardcore Tesla fan, it’s important to remember what Elon Musk has said — Tesla, of course, will not provide vehicles for the whole market, or even for half the market. It is critical that other automakers also have large EV battery plans, and this is the largest I’ve seen.
One key way Volkswagen plans to bring down costs is via simple economics: increase battery production volume. That will organically bring down costs. The magic learning curve never ceases to deliver — as far as I’ve seen.
But let’s now dive into the specifics.
One key point is that with a “unified cell,” 80% of Volkswagen’s battery cell will remain the same — allowing for good economies of scale, planning, and predictability — while the remaining 20% will change depending on the application and need.
Going in the same trajectory as Tesla, Volkswagen plans to move from today’s Cell2Module battery format — which involves battery cells being packed into battery modules which are then packed into battery packs — to Cell2Pack systems that skip the module step and eventually Cell2Car systems that build battery cells into the structure of the cars. This was a surprise final step announced by Tesla last year, while the Cell2Pack evolution had become common knowledge as a plan across the battery industry. It’s unclear if Volkswagen had plans to go this route before Tesla announced it, but either way, I this plan to be one of the most interesting ones announced by Volkswagen today. Will this work (for Tesla or Volkswagen)? What’s the timeline for this? We’ll see.
Also following the same format as Tesla, Volkswagen is going to focus on using iron-phosphate batteries in its entry-level electric vehicles in order to cut costs (iron-phosphate batteries are cheaper) and because entry-level cars can have less range (iron-phosphate batteries don’t have the best energy density). Max Holland explained this path at length just before Tesla Battery Day 2020, so I recommend reading that article if you want to dive much deeper into that topic.
Following those entry-level batteries, Volkswagen intends to use high-manganese batteries (with no cobalt) for most of its vehicles. These kinds of batteries offer good range for moderate cost.
And then there are nickel-manganese-cobalt (NMC) battery cells for specific vehicle application needs, like high-performance cars.
Volkswagen execs also talked about using synthetic graphite in the battery anodes in order to enhance charging performance and speed up road trips.
You can see above that Volkswagen wants to cut charging time on a 450 km (280 mile) road trip from 25 minutes today to 17 minutes by 2025 and 12 minutes after 2025. A 12 minute charge time is barely enough to go to the bathroom and grab a drink or snack.
Volkswagen did eventually talk about solid-state batteries, which is basically sees as the end game. Solid-state batteries would decrease charging time even further, and the company claims it is seeing good progress via Quantumscape at moving from R&D to full-scale production cells, but these are still expected in production vehicles a handful of years down the road. Solid-state batteries would also significantly increase range in an electric vehicle (for the same cost), presuming all goes according to plan.
Volkswagen execs also talked a bit about its supply chain, where it was indicated that it would leave battery mineral supply to others but that it would have a mix of involvement in battery cell production (a mixture of producing cells itself, buying them on the free market, or partnering with others, like Northvolt).
Volkswagen plans to recycle and reuse about 95% of the raw materials in battery cells and showed a bit of factory animation to explain how that works. I also wrote about that a bit 5 days ago.
As for production speed, Volkswagen wants to cut the electrode production process down so much that it becomes like printing money. (The specific time and cost reductions here are unclear, but the message is simple.)