VW Says Battery Supply Problems Have Been Solved… for a While

Matt Posky
by Matt Posky
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vw says battery supply problems have been solved for a while

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]

Matt Posky
Matt Posky

Consumer advocate tracking industry trends, regulation, and the bitter-sweet nature of modern automotive tech. Research focused and gut driven.

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  • Inside Looking Out Inside Looking Out on Jun 24, 2019

    Another European "Tesla-killer" is going down the drain.

  • Islander800 Islander800 on Jun 24, 2019

    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.

    • See 4 previous
    • HotPotato HotPotato on Jun 27, 2019

      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.

  • Lorenzo A union in itself doesn't mean failure, collective bargaining would mean failure.
  • Ajla Why did pedestrian fatalities hit their nadir in 2009 and overall road fatalities hit their lowest since 1949 in 2011? Sedans were more popular back then but a lot of 300hp trucks and SUVs were on the road starting around 2000. And the sedans weren't getting smaller and slower either. The correlation between the the size and power of the fleet with more road deaths seems to be a more recent occurrence.
  • Jeff_M It's either a three on the tree OR it's an automatic. It ain't both.
  • Lorenzo I'm all in favor of using software and automation to BUILD cars, but keep that junk off my instrument panel, especially the software enabled interactive junk. Just give me the knobs and switches so I can control the vehicle, with no interconnectivity of any kind.
  • MaintenanceCosts Modern cars detach people from their speed too much. The combination of tall ride height, super-effective sound insulation, massive power, and electronic aids makes people quite unaware of just how much kinetic energy is nominally under their control while they watch a movie on their phone with one hand and eat a Quarter Pounder with the other. I think that is the primary reason we are seeing an uptick in speed-related fatalities, especially among people NOT in cars.With that said, I don't think Americans have proven responsible enough to have unlimited speed in cars. Although I'd hate it, I still would support limiters that kick in at 10 over in the city and 20 over on the freeway, because I think they would save more than enough lives to be worth the pain.