Volkswagen CEO Denies Reports Of VW Battery Factory

SEP 3 2016 BY MARK KANE 21

Volkswagen anticipates requirement of 150 GWh of batteries annually by 2025

Volkswagen anticipates requirement of 150 GWh of batteries annually by 2025

Audi e-tron quattro concept

Audi e-tron quattro concept

A few months ago Volkswagen hinted that batteries will become a new “company competency”, and that the group will need up to 150 GWh annually by 2025.

Since then, the wider media have been searching for first sites for VW Gigafactory and also potential partners from the existing battery industry but, according to latest news, there will be no Volkswagen battery factory.

Volkswagen CEO Matthias Müller not only denied the intention to build a battery cell manufacturing plant, but called it a nonsense!

“Now Volkswagen CEO Matthias Müller qualified these reports as “complete nonsense”. In an interview with business paper Handelsblatt, Müller said “we certainly won’t do such a nonsense”, referring to the reporter’s question if the company had any plans to fabricate their own traction batteries.”

“Nevertheless, Müller left open a small backdoor for another reversal: The company is carefully investigating the entire battery production process chain, from the extraction of the raw materials to cell production, battery assembly and the integration of the complete batteries into the car. “Then we will see how far we will commit to this topic and invest””

Volkswagen is thin on cash these days as all its “spare change” now goes to paying for Dieselgate settlements, and an automated assembly line is “extremely expensive”.

So, there is only one way to have batteries, while not producing them – and that is buying them from external suppliers.

One of the suppliers – Samsung SDI – recently announced an investment in Hungary, its third (European first) factory; while LG Chem is also still considering a new site in Europe. Both companies were mentioned by Audi previously to provide batteries for its upcoming long-range SUV.

Another previous battery supplier for the Volkswagen group is Panasonic, but we have yet to hear about  any Panasonic’s intentions to build a factory in Europe – they seem to have their hands full in the US.


Categories: Volkswagen


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21 Comments on "Volkswagen CEO Denies Reports Of VW Battery Factory"

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More dazed and confused statements from idiots who just don’t get it!

Laggard OEMs that do not start securing a VERY large battery supply will soon be at a big disadvantage as EVs go into the steep part of the growth curb.

Why? in the car industry it is normal that a lot of key components are provided by suppliers. Large scale full automated production is a key to win in the battery industry and there is good reason to believe that there will be top tier manufactures producing the large bulk of it in low cost countries (Panasonic, Samsung, BYD, etc), and soon second and third tier Chinese and other far Eastern companies will flood the market with cheaper, but lower quality products. In such a buyers market, why do you want to stem high capital investment yourself? Just look at the solar industry, it’s hard to earn anything there on the production site, but western system integrators still make a good living on it. It might on the short term look like a big advantage, but soon car batteries might be a commodity and it is better if your suppliers have to carry the capital risk. Tesla decided to do it themselves, because likely nobody would have been willing to invest at a similar scale. However I don’t think the Gigafactory plan will be that grant, you will soon see that the rest of the market will ramp up capacity… Read more »
“Those who do not learn from history are doomed to repeat it.” The post-er “Get Real” has learned from history. The production of both Nissan’s Leaf and Tesla’s Model S were production constrained by relying on third-party battery manufacturers. BYD started out as a battery manufacturer which then started building its own cars. And you will note that BYD is growing its production faster than any other auto maker, worldwide. Nissan did not solve its battery bottleneck problem until it built two factories specifically to build Leaf battery packs; one in Tennessee (USA) and the other in the UK. Only after that was Nissan able to increase Leaf production to meet worldwide demand. Similarly, Tesla is now building a battery “Gigafactory” to produce a very large quantity of batteries, for the upcoming Model ≡. Battery makers are understandably reluctant to build out more capacity rapidly. They did that back in 2011 or so, and as a result there was an oversupply of commodity li-ion batteries; Envia collapsed as a result (in 2013), and A123 nearly did. That appears to be the reason why Tesla has not been able to get Panasonic to ramp up battery production as fast as they… Read more »

Actually history does provide an example:

Ford was once a very vertically integrated company, including producing its own steel (Rouge River works), it’s own glass, and even owned rubber plantations in the Amazon to provide raw rubber.

Ultimately this proved to be uneconomic compared to the economies of specialization. Now all those materials are provided to Ford by a diverse array of suppliers in a global supply chain

You could argue that some vertical integration helps the faster launch of new industries, but not that it is necessary.

Given the current intensity of investment in lithium battery research and supply, it probably is not necessary for VW or others to take on cell manufacturing, especially since industrial chemistry is not a core competency.

Of course pack design and assembly is a different story because they are uniquely tied to vehicle design. Every vehicle manufacture should be investing in that.

Agree. another example is the solar industry again. Companies like Solarworld were vertically integrated and had long term contracts on silicon and ramped up their own production. they were a pioneer and needed that flexibility when volumes were suddenly growing 100fold. a few years later those deals almost killed them, when the rest of the industry picked up and oversupply of all kind of pre production goods eg cells became available.

Tesla might have done the right thing, because nobody would have supported their plans. but the other manufacturers have less aggressive plans, longer planning timelines, and can likely rely on the industry. you can be sure that VW ha already secured capacity from suppliers.

by the way Tesla does this to a great extend as well, in the end of the day the Gigafactory is to a large extend also Panasonic investment.

@QCO and Bladd:

Thanks for an interesting debate. You argue your side of the case well.

I think we’ll have to wait and see how things unfold over the next few years, before we can see who turns out to be right.

The lack of increase in production by LG Chem in the first half of 2016 is quite surprising, given their well-publicized and growing list of customers:

This does not bode well for LG being able to supply many more EV batteries next year than it does this year.

Remember,Nissan is going to quit from the job of battery production!Let Foxconn could do the job better!

Well, that has been the claim in the news, but we’ll have to see how it plays out. Nissan has been publicly waffling over whether they would continue to produce their own batteries, or buy them from LG, for at least a year or two now.

Perhaps they’ll continue to build batteries in their Japanese and Tennessee plants, but not start up the UK plant again, in favor of buying some (but not all) of their battery supply from LG Chem.


Neither VW nor any other automaker needs to repeat all Musk blunders unless they want to run out of capital just like Tesla did before even building all their “vertically integrated” fantasies.

Auto production efficiency is achieved by Just-in-time (JIT) manufacturing, when everybody does what he/she knows best and can do it at lowest cost and on time due to specialization. Everybody raising his own cows and making his own leather is primitive economy and in automotive production is sure recipe to run out of capital as you can’t get all the world’s money to reproduce all highly expensive specialized production lines from around the world in your own yard and even run them efficiently.

The only fantasy here (besides your wild fool-cell fantasties) is what is MB, BMW, Audi going to do when the Model 3 is crushing their lucrative C class, 3 series, A4 sales just as the Model S is doing to the S class, 7 series, etc:

In fact, Model 3 pre-orders are already impacting the sales of those cars:

This is LG and Samsungs moment to take the Euroean Legacy Ice Manufacturers (ELIM), as in “eliminate”, to the proverbial “Wood Shed”. Wrong and late, could be an expensive lesson come 2020.

Are the ELIM somehow different from the AALIM (American & Asian Legacy ICE Manufactures)??

When it comes to EVs there is no company more pathetic than Toyota who produces something that actualy polutues worse than ICE vehicles called Fuel Cells…

In the announced plans and production the ELIM are far ahead of everyone of the AALIM except for GM and Nissan…

If the EPA had any inteligence and listed to Musk VW could have been forced to build 18 billion or so worth of battery and EV manufacturing…

There is nothing more pathetic for human intelligence than fanboys turning engineering and business questions into dogmatic religious zealotry. Top of the cake is when they become armchair engineers and try to dictate real engineers how to design every small thing.

Are you a “real engineer” zzzzzz or just a bitter fool cell troll watching your dreams evaporate?

It none of your business, troll.

It’s funny. “Everyone” agrees that the car companies will be disrupted. Nobody seems to think battery makers are.

Look into Taketwo and their ingenious string batteries. I don’t know if they deliver all the benefits promised or if there are disadvantages not mentioned, but they are an example of the kind of company that will disrupt the battery industry – they don’t come from inside it and they have a completely different and radically smarter, more ambitious approach.

Someone like this and not someone like LG Chem, Samsung SDI or Panasonic will turn the battery industry upside down. Tesla could perhaps have been in a good position to do it, but with the time tables they’ve committed to they have to go conventional – and would never have partnered with someone like Panasonic if not.

Need for capital is high and investment cycles extremely long. good chance that some new tech startup will emerge, but there is even a better chance that it will happen within a large manufacturer today, that it will get quickly bought up, or tech gets licensed in by one or many of the big players. it’s hard for a small company to disrupt the market if you can’t scale it to a relevant level.

Giants like VW, Bosch, BMW, Daimler, GM, etc have all already bought up some battery startups, but it is unsure if anything has come out of it thus far.

Hey VW, where is your 200 mile BEV for $35k?

Until VW has a few decades of truth telling under its belt I will not believe anything out of that company. It will take many years to really change the culture to one of honesty and integrity. They have never come clean about their Bettle seat bracket scandal which killed and paralyzed many people.