VW needs to rethink its massive battery supply plan as Samsung can’t deliver
May. 27th 2019  Fred Lambert


The Volkswagen group is in the midst of securing a massive amount of battery
cell supply to support its ambitious electric vehicle push, but one of its
suppliers apparently can’t deliver.

Back in 2016, VW launched a new commitment to electric vehicles as they
slowly started to distance themselves from diesel following the Dieselgate

With a goal to make 3 million electric vehicles per year between all their
brands (VW, Audi, Porsche, etc.) by 2025, they considered making their
battery cells to support the extremely high production rate, but they ended
up abandoning those plans.

Instead, they issued battery supply contracts worth $48 billion with
existing battery manufacturers. The contracts are estimated to be for about
300 GWh of battery cells.

But last year, VW CEO Herbert Diess said that he doesn’t want to become
dependent on those manufacturers:

    “We must not make ourselves dependent on a few Asian manufacturers in
the long term,”

They are now considering building their battery factories again, but they
have to work with suppliers in the meantime.

VW split those billions worth of contracts between several companies:
Samsung SDI, LG Chem , SK Innovation, and CATL.

Now Bloomberg reports that Samsung is only able to deliver a fraction of the
originally agreed upon amount of 20 GWh of battery cells:

    “Samsung initially agreed to deliver batteries for just over 20 gigawatt
hours, enough to power 200,000 cars with 100 kilowatt hour packs, before
different views on production volume and schedule emerged during detailed
negotiations, said the people, who asked not to be identified as the talks
are confidential. The impasse cut pledged supplies to less than 5 gigawatt
hours, they said.”

The 15 GWh discrepancy might look like a small amount in comparison to the
300 GWh of total contracts issued, but it’s a huge amount of battery cells
on its own – undoubtedly more battery cells than VW has deployed to date.

VW’s plan to account for the difference is unclear at this point.

Electrek’s Take

Volkswagen should use this problem as an opportunity to build its own
battery factory and secure cell supply that way.

They have been in discussions with Northvolt, a battery manufacturing
startup launched by former Tesla executives, and they should move ahead a
launch a project with the billions of dollars that they would have given

From there, they could scale production over time and gain expertise in
battery cell manufacturing.

It will likely also encourage other automakers to make direct investments in
battery cell manufacturing instead of all relying on a handful battery
 EVLN: (vw pr) Will roll their own EV packs
... makes sense for them to build their own batteries,” says Karl Brauer, an
industry analyst with Kelley Blue Book. And maybe, ... rebuild a reputation
tarnished by diesel emissions, from the cellular level up ...
May 19 2019

+ (VW,Northvolt li-ion jv)
VW Developing Joint-Venture Plan to Produce EV Batteries
May 28, 2019  Specific goals and commitments are vague, but the concept
supports VW’s broader strategy to expand its battery-powered ...

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