VW signs EV battery deal with Northvolt, plans 6 factories in Europe

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FRANKFURT — Volkswagen plans to secure battery cell supply and expand the infrastructure for charging electric vehicles in Europe as it accelerates efforts to overtake Tesla and make so-called e-mobility cheaper.

The world’s second largest carmaker, which is in the midst of a major shift towards battery-powered cars, plans to have six battery cell production plants operating in Europe by 2030, which it will build alone or with partners.

“E-mobility has become core business for us. We are now systematically integrating additional stages in the value chain,” Chief Executive Herbert Diess told VW’s Power Day.

The plants will have a production capacity of 240 gigawatt hours a year, VW said.

Confirming earlier reports from South Korea, Volkswagen said it plans to have a new unified prismatic cell design from 2023, which will support cost cuts generated by the raised level of in-house cell production.

“On average, we will drive down the cost of battery systems to significantly below 100 euros ($119) per kilowatt hour,” Volkswagen management board member Thomas Schmall said.

“This will finally make e-mobility affordable and the dominant drive technology.”

The cost of battery cells used for electric vehicles has fallen to an average of $110 per kilowatt hour (kWh), Benchmark Mineral Intelligence (BMI) said in December.

“We secure a long-term pole position in the race for the best battery and best customer experience in the age of zero emission mobility,” Diess added.

On the same day that Volkswagen made its announcement, Swedish lithium-ion battery maker Northvolt said it had received an order worth more than $14 billion over 10 years from VW.

The battery maker also said it will sell its share in joint-venture Northvolt Zwei to Volkswagen, while the carmaker increases its ownership in Northvolt.

The Swedish company, which aims to take on major Asian players such as CATL and LG Chem and targets a 25% market share in Europe by 2030, added that it had currently secured over $27 billion worth of contracts from key customers.

Volkswagen also said it would enter partnerships with oil major BP and top European utilities Enel and Iberdrola to expand electric vehicle charging.

A lack of infrastructure is still seen as a major hurdle to the mass adoption of battery-powered cars.

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Saurabh Shukla

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