VW to deepen alliances with battery suppliers for electric push

Volkswagen will create joint ventures and help finance battery production to persuade skeptical cell suppliers to back its aggressive push for mass producing electric vehicles, said board member Stefan Sommer.

VW has said it will buy 50 billion euros ($56.57 billion) worth of battery cells and has identified Sweden’s Northvolt, South Korea’s SKI (096770.KS), LG Chem (051910.KS) and Samsung SDI (006400.KS) as well as China’s CATL (300750.SZ) as strategic partners.

“Not every supplier is convinced that electric mobility will come on such a large scale. You need to spend more time convincing them to invest in the auto industry,” Sommer told Reuters.

Volkswagen said that by 2025, it needs 150 gigawatt hours worth of battery production capacity in Europe and another 150 in Asia. By 2030 this figure will double.

“These producers need to prioritize between making a new smartphone or building a new battery factory. So even the battery cell producers are asking: will production volumes scale up quickly?,” he said.

The German automaker is retooling 16 factories to build electric vehicles and plans to start producing 33 different electric cars under the Skoda, Audi, VW and Seat brands by mid-2023.

Customers have been slow to adopt electric vehicles in large numbers because of the limited operating range and long battery recharging times, and because of a lack of charging infrastructure. This has spooked potential suppliers.

“When it comes to normal components, suppliers have the opportunity to sell to other car makers, if VW buys less. But with electromobility we all know: if it does not work for VW, then it won’t work for others,” he said.

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