Volkswagen to Invest in Six EV Battery Gigafactories in Europe by 2030 -- Update
March 15 2021 - 12:16PM
Dow Jones News
By William Boston
BERLIN -- Volkswagen AG said it would invest in six large
battery factories and build out charging infrastructure, the latest
global auto company hustling to take control of battery making amid
an electric-vehicle boom.
The world's automotive industry is pivoting to electric vehicles
to meet new emission requirements and rushing to establish the vast
infrastructure -- from battery factories to charging networks --
needed to sustain the growing market.
Demand for electric vehicles has soared in Europe thanks to
generous government incentives for buyers, making it the world's
largest market for the battery-powered vehicles. In the U.S.,
General Motors Co. is building a $2.3 billion battery plant in Ohio
with Korea's LG Chem Ltd. and recently said it is exploring
building a second plant.
Volkswagen, the world's largest car maker, announced a shift in
strategy on Monday that would see it take control of battery
production and high-speed charging networks in the coming
years.
The first step is a restructuring of its partnership with
Northvolt AB, the Swedish battery startup in which Volkswagen took
a 20% stake in 2019. The German auto maker will increase its stake
in Northvolt and order an additional $14 billion worth of batteries
through 2030 from the company. Northvolt will produce high-end
batteries for Volkswagen's premium cars.
Meanwhile, Volkswagen will acquire Northvolt's stake in their
joint venture in Salzgitter, Germany. The auto maker aims to take
control of the Salzgitter battery plant to expand it and
manufacture batteries for its mass-volume brands in a move it says
could achieve cost savings of up to 50%.
By the end of the decade, Volkswagen said it planned to build
four additional battery factories in Europe to secure a total of at
least 240 gigawatt hours of battery capacity as it ramps up to
boost electric cars to 75% of its new car sales by 2030.
"We aim to reduce the cost of the battery and at the same time
increase its range and performance," said Thomas Schmall, the
company board member in charge of technology and components.
Tim Bush, an analyst with UBS, said the auto industry could soon
face shortages of battery cells, potentially impeding production
just as the industry has recently seen happen with semiconductors.
European electric-vehicle production, he said, could outpace
battery supply this year, meaning European auto makers could be
dependent on Asian imports for years to come.
"You're going to have tightness to the end of the decade in
Europe," Mr. Bush said. "There will be a period of time where Asia
will still be filling the gap between what Europe needs and what
Europe has."
In addition to startups like Northvolt, big Asian battery
manufacturers are building and expanding battery capacity in
Europe. China's Contemporary Amperex Technology Co. is building a
plant in eastern Germany, while LG Chem has expanded operations in
Poland. Another Korean battery maker, SK Innovation Co., has plans
to build a third plant in Hungary, and China's SVolt Energy
Technology Co. is building a plant in western Germany.
Volkswagen's bid to build batteries is one of the biggest
efforts in the automotive industry to secure supply and increase
control of the technology.
With the exception of electric-vehicle juggernaut Tesla Inc.,
most auto makers aren't running their own charging networks. But
with limited charging opportunities often holding consumers back,
Volkswagen has shifted gears and announced plans to operate 18,000
public fast-charging stations in Europe by 2025.
In addition to the company's existing European joint venture
Ionity, which also involves BMW AG, Ford Motor Co., and Daimler AG,
the total includes 8,000 fast-charging stations in Europe that
Volkswagen said it would build with BP PLC, half of which will be
at BP and Aral filling stations. In Italy, Volkswagen will team up
with Enel SpA, the power company, and in Spain with Iberdrola
SA
That is in addition to the German auto maker's Electrify America
venture to build 3,500 charging stations in North America, and its
target of building 17,000 fast-charging stations in China.
Write to William Boston at william.boston@wsj.com
(END) Dow Jones Newswires
March 15, 2021 12:01 ET (16:01 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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