Volkswagen CEO Says It Make Sense For Automaker To Have Its Own Battery Factory

6 months ago by Eric Loveday 45

Volkswagen I.D.

Volkswagen I.D.

With multiple pure electric vehicles on the horizon, including the long-range I.D. electric car, the Volkswagen brass is now saying that it might make sense after all for the automaker to have its own battery factory.

2017 Volkswagen e-Golf

2017 Volkswagen e-Golf

Volkswagen Group CEO Matthias Mueller admits that having a battery factory to call its own is the logical next step for VW. Quoting Mueller:

“If more than a quarter of our cars are to be electronic vehicles in the foreseeable future then we are going to need approximately 3 million batteries a year. Then it makes sense to build our own factory.”

Some automakers, such as Nissan and Tesla, are aware of this as well, and have indeed constructed their own battery factories.

However, competing technologies mean that sometimes another battery maker may have the edge, and if an automaker relies solely upon their own batteries, then that edge will go to another automaker who sources batteries from the leader in the field at that point in time.

Source: Automotive News

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45 responses to "Volkswagen CEO Says It Make Sense For Automaker To Have Its Own Battery Factory"

  1. Get Real says:

    Another defacto acknowledgement that Tesla has really got everything right so far in the PEV world.

    1. jiminonjack says:

      0NE OF THE BIGGEST PROBLEM THE “ICE” MAKERS HAVE WITH THE “EV” IS THAT THERE ARE NOT ENOUGH PARTS going into the “EV” … THEY CANNOT MAKE MONEY ON PARTS As they do on an “ICE” car, because Parts WEAR out…. Henry Ford Once said., ” I can give away every car I make and still make money” On parts that is, as the cars get used parts wear out.Ford stated that he could make all his profit on parts alone…Let’s not discount the value of the part markets, it’s HUGE business in itself. Many more Parts go into an “ICE” car than an “EV”….. The rest is all “BS”

      1. Nick says:

        Are you sure Ford said this? I couldn’t find the quote online.

        1. mhpr262 says:

          “Never trust a quote you find on the internet”

          – Abraham Lincoln

          1. David Tan says:

            Even Abraham Lincoln knows way before Internet
            becomes our way of life. If I may, let me add this:
            “Read all news and articles with a grain of salt, sometime grains”

        2. jimijonjack says:

          Henry Ford , the founder of FORD MOTOR Co. Was Quoted., saying this in a Book I read in Back Circa the 1960’s which I cannot recall the Title now,as it was Long ago & I was Very young. ((I was Just a Kid)) I RECALL VIVIDLY the author quoting it as a matter of “FACT”. So…, If He Lied., Then so am I..

          1. Pushmi-Pullyu says:

            Children’s books are, ummmm, often not the most accurate sources for history. They also claim that George Washington chopped down a cherry tree, and then proclaimed “I cannot tell a lie, I did it!”

            Such books often are (or at least, used to be) more about myth building and moralizing than they are about historical truth.

        3. ffbj says:

          He may have said that not sure, though He did point out the value of service in regard to Ford’s view:

          “Besides the Model T itself another revolutionary element which the Ford Motor Company introduced twenty years ago was the idea of service. Some of the early manufacturers proceeded on the theory that once they had induced a man to buy a car they had him at their mercy; they charged him the highest possible price for necessary replacements. Our company adopted the opposite theory. We believed that when a man bought one of our cars we should keep it running for him as long as we could & at the lowest upkeep cost. That was the origin of Ford Service.”

      2. Chris O says:

        Back in the day Ford took it upon itself to dispatch engineers to scrapheaps to see what parts of Ford vehicles tended to outlast the lifespan of the cars.Those parts were candidates for down engineering.

        Behold the recipe for building utterly crappy cars that are a nightmare to own…

        1. jimijonjack says:

          Very Accurate & nicely said!

        2. Priusmaniac says:

          Durability of goods versus durability of profits by more frequent sales. Today that equation takes another twist in regard to the scarcity of resources. On the other hand evolution is faster so things are obsolete faster too. That’s hard to reconcile. Where do you put the cursor?

      3. bogdan says:

        Ford is not joking about it. I had a Mondeo a few years ago and I needed to replace an acoustic sensor (parking assistant).
        Price/sensor €140. I would say Ford buys it for less than €1.

  2. unlucky says:

    Great. There’s lot of good ways to do it. Please just get a move on. Less talk.

    1. jiminonjack says:

      Chop chop ! Less talk more action , get going!

  3. trackdaze says:

    And until that point you will be subtly guided to their existing products.

  4. Someone out there says:

    Yes of course. The battery is the defining component in an EV. The battery decides what the EV can or can’t do, simple as that. This is where the technology is as far as the driveline goes and what is more important in a car than the driveline?

  5. Pushmi-Pullyu says:

    “…Volkswagen brass is now saying that it might make sense after all for the automaker to have its own battery factory.”

    Well then, Volkswagen brass might be recognizing the economic inevitability. Now, if only GM would do the same!

    The EV revolution advances slowly…

    …but still they come! — “The Eve of the War” from Jeff Wayne’s War of the Worlds

    1. Kdawg says:

      As long as they don’t pigeonhole themselves with 1 technology.

  6. Karsten Nyblad says:

    Automakers can’t chance battery supplier that fast for the simple reason that no supplier can supply all automakers in the world. This means that sometimes some automakers will have an advantage.

    However, in technology the less successful battery suppliers tend to catch up with the more successful. It is very hard to maintain a lead in technology for a long time. Producing batteries in house means that you do not have to have two companies that must both make a profit.

    VW will most likely need more batteries in a few years than any single supplier can provide today, and I think making their own factory makes lots of sense.

  7. Rich Loomis says:

    VW bought Quantumscape battery technology. Where is it?
    http://insideevs.com/challenge-tesla-volkswagen-will-buy-solid-state-battery-startup/

    1. Pushmi-Pullyu says:

      When a startup battery tech company makes claims which sound too good to be true, it’s almost certainly because they are. That’s even more true in the battery tech field than is usually the case.

      “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

      1. Old Saying, long before Electric Vehicles, Probably Still true today:

        “There are Liars, Damn Liars, and then there are Battery Salesmen!” (As close as I can remember hearing it spoken!)

        Of Course – if V.W. is Serious – building the cells and Batteries for their own EV’s does give them some additional control, but that does not mean they can not buy from large Cell and Battery Makers as well!

        Heck, Maybe they could even contract with Tesla for a few % of Supply of the 2170 cells from the GF? Right Now they could or should, be building connections with LG, Samsung, Panasonic, BYD, and maybe Tesla and More, to make up some lost ground, based on the large number of PEV’s they are planning to get on with!

        Even if they could get enough to build a 100 battery packs from each supplier, they could at least do quantitative testing and evaluation starting now, or ASAP!

        They need High Power and long Cycle Life for the PHEV’s – and High Energy and also Long Cycle Life for BEV’s so they likely could have the right strengths they need best supplied by at least two sources, if none was their own!

        1. Red Sage says:

          Tesla has announced they will be tripling the output of the Gigafactory’s maximum Production compared to original projections. Even with that, there will be nothing left over to ‘share’ with other manufacturers. Most will be used with Tesla cars, and a sizeable portion of battery cells will be used for stationary storage systems.

          Even if Tesla somehow didn’t need everything they’ll be producing, or really needs the money they could get from other OEMs…? There is also the hurdle that companies like GM, Ford, and Volkswagen want to build ‘electrified’ cars primarily. Hybrids and plug-in hybrids. Tesla Motors will not allow anyone to use their battery cells in projects that are not fully electric. No, not even Hydrogen Fuel Cell Electric Vehicles. From the perspective of traditional automobile manufacturers, that makes Tesla ‘hard to deal with’.

          1. Pushmi-Pullyu says:

            Tesla supplied both the Toyota RAV4 EV and the Mercedes B class EV with battery packs.

            It’s certainly true that for Gigafactory cell production, Tesla will give priority to its own cars, but it’s very probably wrong to flatly state Tesla wouldn’t sell Gigafactory battery cells to other auto makers. Tesla has shown itself quite willing to work with other auto makers, so long as Tesla makes a profit on the deal!

  8. philip d says:

    I see the most likely setup in the long run being the automakers who own the factories that produce the cells with their own raw materials and assembles the packs all while licensing the patents and the knowhow from battery companies.

    This lets the battery companies focus on research and development while making profit from licensing and technical assistance. The battery companies would also continue building their own cells for various other industries like stationary energy storage.

    The automakers would likely sign licensing contracts bound for something like 6-10 years which would be a similar cycle for vehicle platform renewal.

    At the end of that cycle they could reevaluate their relationship and go with a different chemistry with the same battey company or a different one and retool their factory for the new chemistry while they retool for a new vehicle platform.

    This would keep the power of ramping up or slowing down cell production as needed in the hands of the automaker while allowing for strong competition between battery companies to win contracts by improving chemistry.

    Of course the battery companies may not like this arrangement but they may not have a choice if automakers start their own battery r&d. They may be forced play along.

    1. Priusmaniac says:

      It may be the other way around where battery producers chose which car assembler will get batteries and which one will be left lacking.

      1. Pushmi-Pullyu says:

        There may well be exceptions to the rule, but I think for the most part, “philip d” has the right idea.

        For example, when LG Chem started selling (or more precisely, taking future orders for) its new, cheaper-per-kWh li-ion batteries, Nissan had a long and surprisingly public internal debate over whether to keep making their own battery cells, or to shutter their battery factories and just buy them from LG Chem. In the end, while Nissan did contract with LG for a limited number of batteries, they decided to keep open all three of their factories. Furthermore, I strongly suspect Nissan licensed LG’s tech to upgrade their factories. It was publicly announced that LG Chem and Renault had made a tech-sharing deal, and Renault is Nissan’s partner… so that’s not much of a stretch.

        http://insideevs.com/renault-inks-battery-deal-lg-chem/

  9. Alaa says:

    And how long will it take VW to have a factory of its own? And how much will it cost? And where will they get the money from? And what will happen to VW by the time it makes its first cell? Will it still exist?

  10. Pushmi-Pullyu says:

    “However, competing technologies mean that sometimes another battery maker may have the edge, and if an automaker relies solely upon their own batteries, then that edge will go to another automaker who sources batteries from the leader in the field at that point in time.”

    Well, that’s the “glass half empty” way to look at it. The “glass half full” viewpoint is that battery tech is what EV makers will compete on, and in fact that’s already happening. Competition is a good thing; it drives innovation, and certainly is causing battery tech to advance faster than it would otherwise.

    Jay Cole recently wrote that he thinks EV makers won’t be able to offer anything truly distinct in EVs, because EV drivetrains are all pretty much alike. Well, even if that’s entirely true*, battery tech still gives them an area in which to offer true competition.

    *While I hesitate to disagree with someone who clearly knows more about the EV industry than I do, at the same time I note a surprising amount of difference between various EVs in the area of energy efficiency. So while all production EV electric motors might be “peas in a pod” as far as functionality and efficiency goes, that doesn’t mean that all other things in an EV drivetrain are. I suspect there are significant differences in, for example, the inverters.

  11. jpdecaen says:

    And how different are ICE drivetrains anyways? How is a GM four banger so different from Ford’s?

    1. CLIVE says:

      Who really cares.

      ZEV/BEV or bust!

  12. William Lin says:

    VW sold 10 million cars in 2014. If more than a quarter of their cars are to be EV, that’s 2.5 millions.

    As a comparison, Tesla gigafactory plans to produce battery for 1.5 million cars.

    VW needs to build something bigger than Tesla’s gigafactory.

    1. Pushmi-Pullyu says:

      Now here is someone who has been paying attention.

      Altho I think it’s likely that other auto makers will build multiple battery factories in different countries, as Nissan has already done, rather than a single enormous factory.

      1. Priusmaniac says:

        Bigger production can reduce price but you also have all your eggs in a same basket.
        This is even more a concern for the Tesla Fremont factory sitting close to the San Andreas fault. If we have the big one it is going to be a catastrophy for Tesla cars production. Perhaps that’s another good reason for other factories in Europe and Asia.

    2. Is there anything to say that the figure of 25% will be of the Current Sales #’s? And – will VW be as big in sales in 3-4 years with their shenanigans?

      1. Alan says:

        25% of current sales in the foreseeable future could also be a conservative estimate, given the rapid advancement of Battery tech alone we could see a much higher % ?

        It was only at the beginning of 2015 that I stated on this site that by 2020 we could see cars with 400-500 mile range which a fair few on here seemed to doubt, it now looks like we might even see this breached in 2017 by Lucid, yes it will be expensive but tech advancement + economies of scale will reduce these barriers.

    3. unlucky says:

      I expect that 25% of VWs cars will be mostly PHEVs. They requires less total battery per cap than Teslas do.

      Even regular 100 mile EVs would.

  13. CLIVE says:

    He is correct.

  14. Martin T. says:

    LOL! VW in da house with batteries.
    Copying is a sign of flattery. 😉

  15. Chris O says:

    Between its plans for building “Gigafactories” and its involvement in 350KW charger infrastructure roll out VW is shaping up to be a lot more serious about plug-ins than GM with its “LG Bolt” that comes with very limited quick charge capabilities and zero factory interest in infrastructure building.

  16. Arnold Gordon says:

    VW is the world’s biggest R&D investor, in absolute terms. No other company in the world is investing more in its R&D efforts – $13.2 Billion this current fiscal year for example, an increase of $400 million over last year’s level. At the end of the year when final figures come in around the industry, Volkswagen Group is well on its way to becoming the globe’s largest automaker this year both in terms of revenue and total sales, despite its diesel fallout. VW is already the world’s biggest automaker in terms of revenue. It has being quietly acquiring related advanced tech companies and internally researching in battery technology for a long time now, even before the diesel aftereffects. It makes perfect sense for the company to manufacture its own batteries in view of its upcoming EV direction and mass market production goals.

    1. zzzzzzzzzz says:

      Diesel fraud fallout is far from over. Criminal case in US isn’t closed:
      http://www.forbes.com/sites/bertelschmitt/2016/12/12/report-volkswagens-dieselgate-criminal-settlement-to-be-decided-by-trumps-hardliners/
      Nor EU Commission is happy with German government cover-up:
      http://www.forbes.com/sites/bertelschmitt/2016/12/14/dieselgate-eu-research-suggests-defeat-device-in-brand-new-audi-a3/

      It will continue draining their resources for years.

    2. bogdan says:

      They invested a lot in diesel engine developement and then realized: damn, we still can’t reach the emission standard. Then they came up with a brilliant, water proof device…..
      R&D can sometimes be a huge waste of money.

  17. Bob Nan says:

    Batteries take 1/3 of the Electric vehicle cost and they don’t want to transfer that big a part to another company. Hence they want to make batteries on their own.

    Makes sense, but please start selling Electric vehicles sooner.

  18. Spider-Dan says:

    There is not a single automaker who has been constrained by battery production to this date; there is more than enough existing battery production to meet all demand to date.

    Yet for some reason, people believe that a major battery shortage is Just Around The Corner, and that all the third-party battery suppliers in the world will be (permanently?) insufficient to meet the incredible demand to come.

    The notion that automakers must own their own battery factories goes against most of the last 100 years of industrial economy. If there is a gaping hole in battery supply, other companies will happily rush in to compete with LG Chem and Panasonic.