LG Chem Denies Report Of Major Battery Deal With Volkswagen

3 months ago by Steven Loveday 20

Volkswagen

Volkswagen I.D.

Lithium-ion battery maker, LG Chem, may not have secured a major deal with Volkswagen…yet.  Or maybe it has?

Nearly a year ago, we reported about Volkswagen’s potential battery partnerships with LG Chem and Panasonic. Both companies are already suppliers for VW to some degree (as is Samsung SDI), but the company is planning a major surge into electrified vehicles starting in 2019, and has yet to announce a substantial partnership to supply those EVs, or to move forward with potential battery factory plans of its own.

Chevrolet Bolt EV battery pack supplied by LG Chem

LG Chem has been keeping quite busy in the EV battery space, and has significant plans for the future.

The company is currently supplying batteries for the Chevrolet Bolt and the Chrysler Pacifica Hybrid, to name a few.  Added to this, LG Chem has a partnership with Lucid Motors and Faraday Future, is in the midst of building a battery factory in Poland, and also just launched residential storage systems in the United States.

Despite all of these announcements, the battery maker is unwilling to publicly commit to the possibility of a $6.2 billion deal with Volkswagen. According to Reuters, the DongA Ilbo newspaper yesterday (Tuesday, June 26th) released information stating that LG Chem was to be the official battery supplier for Volkswagen’s new Modular Electric Drive project. Reuters says that there were no sources cited in the post.

LG Chem revealed in a recent filing, “No contract has been agreed on.”  But that doesn’t mean something hasn’t happened over the days since.

So this statement, doesn’t mean that there won’t ultimately be a deal, but LG Chem is not ready to state that a larger deal with Volkswagen will become a reality. It could, however, be construed to read that a contract negotiation is in progress. Unfortunately, LG Chem was even unwilling to admit that talks are underway. Reuters could not reach VW for an official comment.

So, who will it be to supply VW?  Lg Chem, Panasonic or Samsung SDI?  Only time will tell who is going to be supplying VW, and by extension Audi, with those €100/kWh ($112/kWh) battery cells the company recently touted.

Source: Reuters

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20 responses to "LG Chem Denies Report Of Major Battery Deal With Volkswagen"

  1. Alan says:

    No smoke without fire as they say !

  2. leafowner says:

    The wheels on that car are similar to the ones spotter on the Model 3 recently. Must be something to that design….

    1. Nada says:

      Yes there is…
      Moondisc wheels are the most aerodynamic for the best range so the closer you get to that the farther the car can go…

  3. unlucky says:

    Why would we think it has just be just one of the companies supplying VW? Sure, having two brands of packs in one car would be difficult, but VW is making 2 or 3 cars, why do all of them have to have the same supplier?

    The point of outsourcing is you can play suppliers against each other to get a better deal. There’s no reason to think VW wouldn’t multi-source in order to accomplish this.

    1. Roy_H says:

      Years ago, VW signed deals with just about every battery manufacturer in the world. I don’t know the terms, but I suspect they were more like letters of intent. No reason to believe they have changed their policy, they will keep as many options open as possible.

  4. Josh Bryant says:

    Seems like LG didn’t like the $100/kWh number floating around with their name attached to it. Even if they did agree to that price for VW it would hurt thier other negotiations/contracts.

    1. Chester Koenig says:

      I believe this is the most logical possibility. Good thought.

  5. Mil says:

    Aside from Tesla, no one else (car manufacturer or battery manufacturer) is building a battery factory on the scale needed for mass market EV. Time will tell whether this materialises to something starting but right now there is nothing and Tesla is already talking about starting to build another 3 to 4 Gigafactory buildings by end of 2017.

    Unless these car manufacturers start spending some money on battery production, they’re not going to be able to catch up despite throwing all the money at the problem.

    1. Nada says:

      China the worlds real leaders by doing will be making enough batteries for lots of mass market EVs…
      Meanwhile America continues to fall to the culture of shiny…

      https://www.bloomberg.com/news/articles/2017-06-28/china-is-about-to-bury-elon-musk-in-batteries

      1. MaartenV-nl says:

        How much of that Chinese is “intent” or vaporware and does not have the finances and permits they need.
        And why is the Tesla factory in Nevada at its 2018 scale and not at its 2020 projected scale (105GWh)

    2. KM says:

      From the graphs I have seen online showing expected factory capacity in 2020 LG would only have 1GWh less than Tesla so just a few % less. The difference is that Tesla will have it in one location (that year) whereas LG will have a number of smaller factories.

      1. MaartenV-nl says:

        Where is a graph that depicts LG-Chem as having over 100GWh production capacity operational in 2020?

      2. Pushmi-Pullyu says:

        “From the graphs I have seen online showing expected factory capacity in 2020 LG would only have 1GWh less than Tesla so just a few % less. The difference is that Tesla will have it in one location (that year) whereas LG will have a number of smaller factories.”

        No, the difference is that Tesla & Panasonic are, really and truly, rapidly building out new battery cell manufacturing capacity at Gigafactory 1… and LG Chem is talking big and not actually doing much.

        1. unlucky says:

          The difference is Tesla can’t stop mouthing off while LG Chem just does their business.

          It’s bizarre that anyone thinks that these large battery makers can’t keep up EV demand. Companies sign deals for batteries years in advance, and that’s plenty of time to build the factories needed and line up materials.

          If a car company convinces themselves they need batteries they certainly can find a company who can build out to supply them. The difference with Tesla is they’ve already convinced themselves they have need for several hundreds thousand cars of cells. Others haven’t make that call yet, they’re more unsure.

          1. Fungus says:

            Tesla isnt only making batteries for cars. They are also working on something called Powerwall, which is a proven concept already powering several islands (latest project was an island on Hawaii i think) and they have a contract in Australia too i belive.
            So batteries are needed. And the chemistry in those stationary powerwalls are different from the cars. So big production will be needed.

            1. unlucky says:

              LG Chem makes batteries for more than cars too.

              And your Australia point is a great example of what I”m saying. That turned out to be nothing. They sole one PowerPack in that deal. Made a bug stink on Twitter, get a lot of press but it was really a very minor thing.

              Meanwhile LG Chem just does business. They build batteries for hundreds of millions of phones a year. They build factories instead of talking about “gigafactories”.

              And as soon as they have contracts lined up for a bunch more car batteries they’ll build a lot more car batteries too.

      3. Renier De Jager says:

        OK, so let’s divide LG’s capacity between VW, Audi, Porsche, Seat, Skoda, Hyundai, Kia, Renault, Nissan, Jaguar, Land Rover and GM, what does that leave you with?

        Maybe 80 000 cars per annum per above-named manufacturer?

        That’s assuming Samsung SDi will provide Mercedes, BMW, Ford, Honda, Toyota, PSA, Volvo, Lexus, Accura, FCA with batteries?

        The point is that even if Tesla, LG Chem, Samsung SDI and CATL all have similar sized production facilities operational by 2020, Tesla will have 25% of the EV market and the other 25 + brand names 75% (assuming that the Chinese EV manufacturers are supplied by BYD and other suppliers not mentioned above). That implies on average 3% market share per brand (and it excludes Mitisbushi, Mazda, Subaru and other laggards). Now amortise your R&D costs over a 3% market share compared to Tesla with a 25% share. Then roll out a competing charging network and an autonomous driving system (with in the same time frame) and submit the same mileage data than Tesla to legislators to approve your autonomous driving system..

        One of two things are going to happen:

        Tesla will have first mover advantage and dominate the future of mobility and there will be casualties amongst legacy manufacturers or Tesla will go bankrupt and nothing will change. I know which are the most likely outcome.

        1. BenG says:

          Toyota is a Panasonic partner, like Tesla.

          And since Toyota has said they expect the Prime to be a mass-market car like the second generation liftback Prius, then I’d say they have Panasonic all lined up to supply batteries for that ramp to ~100,000+ this year and over 200,000 in a year or two.

        2. unlucky says:

          Why would you divide capacity? The capacity is a function of what they need to produce. If their buyers want more they’ll make more. So you can’t just divide their existing capacity across customers.

          That having been said, if there is demand for a very large number of EVs in 2019 then I wouldn’t be surprised if Tesla supplies 25% of them. Tesla has geared up to make a lot of them and the other makes are unlikely to do so. So if EVs are really fungible (interchangeable) to customers then Tesla will sell every one they make and that’ll be a lot.

          But if demand is lower and people don’t accept all EVs as interchangeable then I think things like regionalism will keep Tesla from selling 25% of the the EVs out there. Chinese are going to buy (largely) Chinese cars. Germans are going to buy largely German cars. I still wouldn’t be surprised to see Tesla #1 but 25% would be rather high in that case.

    3. Pushmi-Pullyu says:

      Aside from Tesla, no one else (car manufacturer or battery manufacturer) is building a battery factory on the scale needed for mass market EV.

      Not even BYD?

      I don’t know how fast BYD is building out new capacity, but at last report they were the closest of any battery maker to challenging Panasonic as world leader in MWh of EV batteries per year.

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