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VW plans to build new battery cell factory to support its electric car ambitions

Volkswagen has been looking for years at ways to secure battery cell supply in order to support its ambitious electric car plans and now it will finally involve having its own battery factory, according to a new report.

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

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 own battery cells in order 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.

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,”

In October 2018, Manager Magazin reported that Volkswagen was in negotiations with SK Innovation, a Korean battery cell manufacturer, to partner up on a gigafactory in Europe.

The deal appeared to be similar to Tesla’s own Gigafactory 1 project with Panasonic.

It was later reported that the negotiations fell apart because LG Chem, one of the battery suppliers that VW is going to be dependent on for upcoming EV production, apparently threatened to stop supplying them as a result.

Now Volkswagen is expected to again move forward with its own battery cell factory according to Reuters:

“Volkswagen’s supervisory board is on the brink of announcing the automaker’s entry into battery cell production, two people familiar with the matter told Reuters on Monday.”

The new battery factory would have an annual production capacity in the gigawatt-hours and it would be located in Germany, according to one source.

VW is expected to announce the plan imminently.

Electrek’s Take

Battery cell production is currently the main production bottleneck for most successful electric vehicle programs.

Like Tesla did six years ago, automakers are starting to figure out that they need to be deeply involved in the production of the cells in order to make sure they have access to the supply.

We will report back when we have more details about the plan. I am curious to know what the actual planned capacity of the new factory will be.

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