By on June 24, 2019

Following rumors that Audi’s E-Tron would have to be delayed due to issues with battery supplier LG Chem and some unforeseen “software development” problems, Volkswagen Group’s plan to build 330,000 electric vehicles per year in Zwickau, Germany, by 2021 appeared to possess a plot hole the size of the Grand Canyon.

The EV problem is not unique to Volkswagen. Other manufacturers hoping to build electric cars have also been struggling with factory retooling, high development costs, and in-demand battery suppliers that are more than willing to change their prices. However VW claims to have solved some of these issues, at least for a while, citing new investments in China and multiple partnerships with battery concerns.

“I can confirm that for the first years of our plan, a sufficient supply of cells has been contractually secured,” Thomas Ulbrich, VW brand management board member in charge of electric mobility, explained to Automotive News Europe this week.

He followed by saying he was unconcerned with rumors suggesting suppliers may cancel contracts following Volkswagen’s decision to invest 1 billion euros into a battery cell plant in Salzgitter, Germany, with partner Northvolt. “They probably hoped to maintain an oligopoly for a very long time,” Ulbirch said. “We have the contracts so no one is going to stand there and tell us ‘we are not going to supply you any more, help yourselves if you want to build them anyway,’ — that’s not possible.”

The automaker has selected LG Chem, Samsung and SK Innovation as battery suppliers for Europe, along with Contemporary Amperex Technology for China. SK Innovation is scheduled to become a partner in North America in 2022. Using their combined might, VW thinks it can hit production targets without breaking much of a sweat.

That might not help in the very short term, however. According to internal documents referenced by Belgian newspaper L’Echo, Audi is believed to have reduced its outlook for the E-Tron this year by nearly 10,000 units. While that’s largely due to the initial product delay, concerns remain about VW’s overall battery supply — especially as those “mainstream” ID-branded models approach their own launch dates.

Audi is believed to have similarly delayed the launch of the new E-Tron Sportback. Originally expected to go on sale before the end of 2019, deliveries of the crossover are now tentatively scheduled for early 2020. The ID3/Neo begins assembly this year, with sales expected to commence before next summer.

As automakers need less of a bandaid and more of a suture with lots of gauze to cope with these introductory EVs’ supply problems, VW is trying to confront things directly and be more transparent regarding the future complications which will undoubtedly manifest. The automaker’s latest plan incorporates building two new Chinese facilities (operating at a 600,000-unit capacity), utilizing the brand’s MEB platform to help bolster EV production. The company expects it will need more than 300 gigawatt hours (GWh) of battery supply just to cover Europe and Asia in 2025. That’s absolutely impossible without major commitments from multiple battery suppliers and borderline crazy without a customer base ready to scoop up those vehicles.

From Automotive News:

VW is making changes to its battery-purchasing plan over concerns that supply deal with Samsung, might unravel, Bloomberg reported in May. VW could now only source fewer than 5 gigawatt hours of cells from Samsung SDI rather than the 20 GWh initially planned, sources told Bloomberg.

Ulbrich did not deny the Samsung report, saying that the automaker is and will be looking for future supply to cover its growing demand.

“Our procurement needs continue after that [first wave] however,” he said. “You will likely see us permanently in negotiations for cells for the next three to five years.”

Undoubtedly. But good luck finding a reliable way to source 300 gigawatt hours by 2025, Volkswagen. You are definitely going to need it.

 

[Image: Volkswagen Group]

 

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14 Comments on “VW Says Battery Supply Problems Have Been Solved… for a While...”


  • avatar
    Asdf

    If VW hasn’t managed to fix the battery charging defect causing the charging time for its BEVs to exceed a reasonable maximum of five minutes for a full charge, then the issue of battery supply should be a moot one, because VW shouldn’t even build a single BEV before this defect is addressed, and therefore doesn’t need a supply of batteries until the defect is no longer present.

  • avatar
    SCE to AUX

    Let’s hear from the experts declaring that the ‘mainstream’ mfrs could produce Tesla-killers any time they want to.

    Still think that moron Musk built the Gigafactory just to feed his ego?

    To their credit, VW is the only mfr besides Tesla who seems to be taking volume EV production seriously. Their public discussion of the challenges is refreshing. Even Hyundai – with all its big talk and good reviews – is excreting Kona EVs very slowly due to battery supply limitations.

    However, VW and Jaguar (to name two) need to improve their efficiencies. The e-tron and I-Pace have proven to have disappointing real-life ranges compared their Tesla counterparts. This will raise weights and costs, hurting sales and profitability.

    It will also be interesting to see how the EV upstarts can actually sell within their dealer networks. How to convince the local dealer to sell a $60k ID Buzz instead of a $35k Tiguan? Plus, are they only going to sell in CARB states, like the e-Golf?

    • 0 avatar
      mcs

      One reason Teslas are so efficient are the Halbach Array motors. Wait until the Maxwell technology lightens up the battery cells. Even more efficiency.

      The competitors still don’t have anything comparable to the supercharger network. Tesla has 11.5 kW capability for home charging. Jaguar, from the information I have, is only a lowly 7 kW. Audi is a little better at 9.6kW. Of course, the Tesla is even faster since the greater efficiency results in more “miles per minute” while charging.

      For me, the other advantage is that we now have a dedicated local independent Tesla shop. They even offer aftermarket upgrades. Try finding an independent for your out of warranty i-Pace ior etron.

    • 0 avatar
      conundrum

      Can’t understand the logic used here regarding efficiency. Is a car with a bigger gas tank than another more efficient? Because that seems to be what’s being argued here with regard to Tesla versus Jaguar and e-Tron. Efficiency is miles per kWh, nothing else. I could be persuaded that battery management and superior regeneration strategies work in Tesla’s favor. A more efficient motor? How much more efficient? From 88% to 90%?

      The Jaguar is AWD standard with front and rear motors. Is that Model X blimp more efficient in two motor form? Jaguar only ever planned to make 12,000 units a year of the I-Pace for worldwide consumption so who cares about them in a sales race? And where I live in Canada, people don’t even really know what a Tesla is, because due to zero incentives none have been sold beyond half a dozen to rich people and a few Model 3 from the electric vehicle gotta have one nutballs. There is exactly ZERO Tesla service other than missionaries dispatched from central HQ, while the Jaguar dealer is right there in town if you’re a wealthy person who can afford a luxury EV and actually want one to tool around in one locally.

      People can write any old guff they want to it seems to me and miss the point either deliberately or by not comparing like to like.

      Strategically, Panasonic and Tesla were indeed way ahead on Gigafactory compared to mass market VW. You only had to read the business pages over the last four years to see that limited lithium and cobalt supplies were going to constrain everyone else – that’s why China decided to corner the raw material market and become the world’s battery supplier. All faithfully reported, so it should be no surprise except to the completely unaware which is likely over 90% of the general public glued to social media and snapping selfies.

      The rest of the Western vehicle manufacturers were left to source batteries from essentially nowhere except promises from companies promising to be volume suppliers but who were not and are not. And that’s the problem facing EV makers. It’s VW’s fault for jumping in by investing hugely in EV design without due care and attention but who are finally waking up, no longer asleep at the wheel on battery supply issues.

      Meanwhile the public at large couldn’t give a rat’s a*s about EV’s, so the battery supply problem is the least of anyone’s worries. More concerning would be that EV sales won’t grow quickly enough to provide return on already huge investments. There’s going to have to be sea change in your average joe’s attitude to actually purchasing EVs before that happens. The prices are still ridiculously high and the vehicles overweight t*rds, while the self-anointed preachily tell the people to change to transportation “somethings” that are totally inconvenient. Most people do not live in suburbia in a detached house with garage and charger and have a much more constrained lifestyle than those who comment here. That’s why second-hand Leafs are worth nothing.

      • 0 avatar
        SCE to AUX

        @conundrum:

        Yes, I meant efficiency, not range.

        Tesla Model X 90d = 257 miles
        Jaguar I-Pace (also 90 kWh) = 234 miles
        Audi e-tron (95 kWh) = 204 miles

        This makes the Model X 10% more efficient than the Jag, and 33% more efficient than the Audi. Real-world drivers confirm the disparity.

  • avatar

    Another European “Tesla-killer” is going down the drain.

  • avatar
    islander800

    Frankly, I’m perversely almost looking forward to one fallout from Trump’s coming insane war with Iran. This could be the last “oil war” (people don’t think it’s about anything else, do they?). It would cause immediate world oil shortages and prices through the roof. Maybe, $6.0/gallon or more – if you can find it.

    This has the potential to create a tipping point where many people say, screw it, I’m done with ICE vehicles. It’ll be fascinating to watch various manufacturers struggling to get newly-in-high-demand electrics to market, let alone all the ancillary business like solar roofs and storage batteries for home charging. That’s the only way this can roll out quickly (over 5 – 10 years)on a vast scale. Distributed power generation and storage will be needed as electric grids will prove inadequate for the task. And, incidentally, getting off ICEs is also absolutely needed, over the same frame, if we are to avoid climate catastrophe. But hey, the upside is a major boost to the economy with new jobs and business opportunities galore, similar to the effect when the country originally electrified over a century ago.

    We’re living in interesting times and they’re about to get a lot more so.

    • 0 avatar
      SCE to AUX

      $6 gas won’t change demand much. Heck, with $4 gas the F150 was still the best-selling vehicle.

      Concerns about the grid are overblown. My EV (driven 1100 miles a month) adds 20% to my electric consumption. You’d have to see a huge increase in EV deployment to notice more demand on the grid.

    • 0 avatar

      It will restart drilling boom in US. Nothing will change.

    • 0 avatar
      HotPotato

      I hope you’re right. We can kinda test the hypothesis with California right now. Gas there costs about twice as much as in, say, Louisiana, and the obstacles to EV adoption are low (there’s mushrooming charging infrastructure, mild weather, and nice incentives). Californians do buy more EVs than any other state. But they also buy a whole lot of gas guzzlers, most of which will never pull a horse trailer or see an inch of snow. I don’t think we’ll see mass adoption until there are used Model 3s available for used Corolla money. Right now the cheap used EVs are old short-range ones, which have limited appeal.


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