Volkswagen Begins Battery Cell Research, May Opt For Proprietary Mass Production

2 weeks ago by Steven Loveday 23

Volkswagen I.D.

Volkswagen I.D.

We reported awhile back that Volkswagen may be interested in having its own battery facility. Now, the world’s largest automaker is moving forward, having chosen a location and already started hiring employees.

Volkswagen I.D. BUZZ

Volkswagen I.D. BUZZ

With VW’s promise to produce an entire vehicle family of electric cars (initially coined I.D.), comprised of plans for about 30 new offerings, battery research and potential development is key.

The company has chosen to utilize its engine plant in Salzgitter, as the site for battery research and operations. Works councilor, Bernd Osterloh, told German media:

“We assume that the battery will account for 40 percent of the value of a car in the future. The question is whether we want to be completely dependent on manufacturers from Asia. I say that as unions and works councils, we do not want this at all. “

VW will be faced with the same decision plaguing most automakers that are venturing into electrification. Should they solely produce their own batteries for only their use, produce batteries with intent to supply internally and externally, outsource with one or multiple “Asian” battery makers, or initiate any combination of the latter concepts?

Feel free to just go ahead and make the all-electric, I.D. Buzz already VW!

The automaker is in the midst of a substantial reform and conversion program, due to recovering from its “Dieselgate” emissions scandal. Profitability is of the utmost importance at this time. However, VW has made it clear that future development and sustainability is at the top of its radar. Executives will have to crunch numbers and make some key decisions regarding which direction is best for the entire Volkswagen Group, which includes brands such as Audi, Porsche, Bentley and so on. Battery research is the first of many steps in the process.

Source: Westfälische Nachrichten

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32 responses to "Volkswagen Begins Battery Cell Research, May Opt For Proprietary Mass Production"

  1. Four Electrics says:

    “We assume that the battery will account for 40 percent of the value of a car in the future.”

    Between 2008 and 2013, China’s solar-electric panel industry dropped world prices by 80 percent. Will China will enjoy a price advantage in batteries as well?

    1. HeisenberghtNUTS says:

      When I try to imagine a year 2025 with solar at 0.30$ per watt peak AND Li ion at 30$ per KWh it kinda gets hard to see a business case for coal, nuclear etc…

      I just installed 130W semi flexible solar on my RV at 1$ per watt peak. Still I have that 300 liter spare space under the seats waiting to be filled with Li ion 😉

      Future is bright!

  2. Hauerg says:

    40% for battery?? Maybe when you include the motor(s). For battery alone it would be too expensive even today, much more so for 2020.

  3. Some Guy says:

    40% Battery value? So they are going to built affordable EVs for less than 20k a piece with 50 kWh packs?
    Or just super expensive batteries?

    1. Pushmi-Pullyu says:

      Hmmm, I don’t know that the 40% figure is outside reasonable parameters, assuming VW is aiming at an “affordable” or “semi-affordable” price tier.

      If we assume $200/kWh for the battery pack — the assembled pack not, just the battery cells — and if we assume a 50 kWh battery pack, that comes to $10,000. If that’s 40% of the cost of the car, then the VW’s cost for the car is $25,000. If VW makes, let’s say, 18% profit on the car, then that yields a dealer cost of $29,500. If we add a nominal 10% for dealer profit margin*, that suggests a MSRP of $32,450… which is less than base MSRP of a Chevy Bolt EV.

      So unless VW is aiming at a higher price tier for an EV, that 40% figure looks reasonable. I know there is some wiggle room in those figures, but I doubt anyone is going to come up with reasonable estimates which are going to yield a significantly different result.

      *Average dealership profit margin on sales is reported to be rather less, but then the MSRP is just a suggested price which will usually be negotiated downward, reducing the dealer’s actual profit margin. Let’s not forget that the bulk of the average dealership’s profit margin comes from service and parts, not new car sales.

  4. deijmaster says:

    Somebody help VW they are totally lost… Starting research now? Battery prices? Location? Ouch. I guess more emissions went to heads than announced in the past years…

  5. Rich says:

    In 2014, VW bought a stake in QuantumScape battery technology.
    This didn’t pan out? Any word on QuantumScape progress?

    http://insideevs.com/july-volkswagen-will-know-breakthrough-battery-tech-quantumscape-ready-primetime/

    1. zzzzzzzzzz says:

      http://www.motortrend.com/news/volkswagen-working-on-new-ev-battery-cell-module-architecture/
      “Toward that end VW is working with multiple battery partners, although Volkmar Tanneberger, head of development electrics/electronics, named Panasonic, Samsung, and LG Chem as key partners. He noted that the Koreans are winning the price war.”
      “VW bought a stake in QuantumScape to pursue this concept, but Tanneberger reckons they’re probably a decade away from use in cars. Expect to see them in phones and power tools first.”

      1. Rich says:

        Thanks for the info.

    2. Pushmi-Pullyu says:

      Quantumscape was claiming a radical breakthrough in battery tech. Such claims almost never turn out to have practical applications, even when they aren’t mostly or entirely hype. VW was perhaps convinced it was worth the long-shot investment, but there was never much chance anything would come of it.

      There are new claims for breakthrough battery tech being announced at the rate of about one or two a month. Please note that over the past few years, LG Chem’s new lower cost batteries are the only such claim which have resulted in a commercial product with widespread application.

      Or, to put it more succinctly:

      My top advice really for anyone who says they’ve got some breakthrough battery technologies, please send us a sample cell, okay, don’t send us PowerPoint. Just send us one cell that works with all appropriate caveats; that would be great. That… sorts out the nonsense and the claims that aren’t actually true. Talk is super cheap; the battery industry has to have more B.S. in it than any industry I’ve ever encountered. It’s insane. — Elon Musk, Nov. 5, 2014

  6. ffbj says:

    How brilliant of them to figure this out.

    1. Pushmi-Pullyu says:

      Yes, VW is finally facing the reality that commodity battery suppliers are not ramping up production anywhere near as fast as is going to be needed as the EV revolution accelerates, and that they are — GASP! — actually going to have to pay to build high-capacity battery factories for their own supply.

      Just like BYD and Tesla and, at least to some extent, like Nissan.

      Duh!

  7. Maybe VW Group could ask BYD, LG, Panasonic, and others, to work with them on building a Gigafactory (Megafactory, at least!) For and with them?

    It seems Panasonic will soon be having some excess 18650 manufacturing capabilities!

    1. Or, they could form a Partnership with Tesla and get Elon and JB to help them! An offer to help Tesla Quadruple their Supercharger Network, if serious, could get their attention!

      Or, since they were distracted by Diesel, and Toyota, by Fuel Cells, maybe they could tie up with Toyota and create a Battery Gigafactory between them!

  8. Doggydogworld says:

    Those freaking out about the 40% number need to learn a bit about the car business. Manufacturing cost, including factory depreciation, runs about 55% of MSRP. The rest is G&A, R&D, dealer discount/margin, advertising, transport, warranty reserves, profit, etc.

    By this metric manufacturing cost for a $37.5k Bolt would be a bit over $20k. The battery cells alone are $8700 ($145/kWh * 60 kWh). Pack cost is probably around $11k. That’s over 50% of the value, meaning VW expects considerable improvements in battery cost to get to the 40% level.

    At the $100k price point life gets much easier. Even a 90 kWh pack at $16k is <30% of value. Plus a big part of this is offset by drive train savings, which are much bigger at 400hp than for a 100hp econobox.

    This is why it's so hard to compete with gascars at the low end. Like many high end features (ABS, air bags), EV tech must start at the high end and work down. Tesla was the first to get this. GM still doesn't.

    1. Pushmi-Pullyu says:

      At the $100k price point life gets much easier. Even a 90 kWh pack at $16k is <30% of value.

      Yeah, VW's 40% figure makes sense if they're aiming at a MSRP a bit higher than the Bolt EV's, but not that much higher. Tesla at one point said that the battery pack was 25% of the cost of the (Model S) car… which at that time had an average sale price of about $95k.

  9. Someone out there says:

    The battery is by far the most important component of av EV. It decides what the car can or can’t do. It makes very good sense to make your own batteries if you are serious about EVs

  10. Mister G says:

    YAWN

  11. J P DeCaen says:

    Lots of negative sentiment towards VW as usual, but if you use your imagination, you’ll see that a seriously committed manufacturer of this size will eventually have an enormous importance in the electrification of cars. Where are FCA’s, Ford’s, GM’s, Toyota’s and Honda’s Gigafactories? I resent VW as much as the next guy for Dieselgate, but please stop knocking them for trying to folllow the right path.

    1. Pushmi-Pullyu says:

      I’m irritated that VW took so long to come to the extremely obvious conclusion that they’ll have to build their own high-volume battery factories, but at least they are now publicly talking about the necessity for doing so.

      That puts VW one up over GM, Toyota, Honda, Ford… in fact, it puts them further along than every other auto maker except Tesla, BYD, and Nissan.

      Time for a half-hearted and reluctant “Go Volkswagen.” 😉

    2. Toni says:

      That’s the problem – VW have stated so many “commitments” in the past that most people perceive most of their press releases as shameless lies…

    3. SJC says:

      VW/Audi have made SO many announcements over the years that never happened, their credibility is SHOT.

  12. byebye says:

    VW up and e-up, e-up 20k euros more expensive, 18,7 kWh, where VW buy its batteries ?

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