Volkswagen Group unveiled a massive push to drive down the cost of producing batteries for its electric vehicles in the hopes of speeding the transition away from gas-powered cars.
The automaker, which is the second largest in the world based on sales, said it would reduce the costs of producing its batteries by up to 50 percent, build multiple battery factories around the world, expand its network of charging stations, and eventually transition to solid-state technology that would cut costs and boost efficiency. The ultimate goal is to make electric cars with longer ranges and quicker charging times — two of the biggest barriers to mass EV adoption.
The race for huge improvements in battery technology is one of the most expensive and hotly contested on the planet right now. Practically every automaker is betting that electric vehicles will be the future, with some of the largest countries (and largest auto markets) in the world moving to phase out gas-powered cars and trucks. To ensure that shift, batteries need to be more powerful, last longer, and be cheaper to make in order to entice enough customers to make the switch from gas to electric.
“Our transformation will be fast, it will be unprecedented,” said VW Group CEO Herbert Diess. “The transformation will be bigger than anything the industry has seen in the last century.”
The automaker’s nearly two-hour “Power Day” was widely seen as an echo of Tesla’s recent “Battery Day” event. Both automakers touched on issues around battery chemistry, supply chain, production, and charging as a way to make electric vehicles more affordable and attractive to a wider swath of customers. Here are the biggest announcements from VW’s Power Day event:
Unified battery cells
Starting in 2023, VW plans to roll out a new unified prismatic cell design of its batteries that will be installed across the automaker’s brands. The goal is to have this unified cell design powering up to 80 percent of VW’s electric vehicles by 2030.
Thomas Schmall, Volkswagen Group Board Member for Technology, said the goal was to drive down the cost of battery production below $100 per kWh, which most experts believe will make EVs roughly the same price as gas-powered vehicles.
The price per kilowatt-hour (kWh) is the unit of energy most commonly used to measure the capacity of the battery packs in modern electric vehicles. Those prices have been falling dramatically over the last decade, from $1,100 / kWh in 2010 to $156 / kWh in 2019, a drop of 87 percent.
“We aim to reduce the cost and complexity of the battery and at the same time increase its range and performance,” Schmall said. “This will finally make e-mobility affordable and the dominant drive technology.”
VW hopes to drive the cost down even further with more efficient production and a robust recycling process. The automaker aims to “gradually” reduce battery costs in the entry-level segment by up to 50 percent and in the volume segment by up to 30 percent.
One way Volkswagen plans to boost production of battery-powered vehicles is through a massive expansion of its manufacturing footprint. The automaker plans to have six battery cell production plants operating in Europe by 2030, which it will build alone or with partners.
The first two plants will be in Salzgitter, Germany, and Skelleftea, Sweden; a third plant will be established either in Spain, Portugal, or France; and the fourth factory will be based in Eastern Europe. The plants will have a production capacity of 240 gigawatt-hours a year, Schmall said.
On the same day as VW’s event, Swedish battery maker Northvolt said it had received an order from the automaker worth $14 billion. Northvolt will also sell its share in joint-venture Northvolt Zwei to Volkswagen. The Swedish company has said it plans to increase its market share in Europe to 25 percent by 2030.
Volkswagen said it intends to have 18,000 public fast-charging points in operation in Europe by 2025, a fivefold increase over the current state of EV charging in the continent.
This will be accomplished through a series of strategic partnerships that were announced today. VW said it would team up with oil giant BP and top European utilities Enel and Iberdrola to expand electric vehicle charging.
With BP, Volkswagen said it wants to establish about 8,000 fast-charging points throughout Europe, with most of the stations concentrated in Germany and the UK. The fast-chargers with a charging capacity of 150 kW will be installed at a total of 4,000 BP and ARAL fuel stations.
In partnership with Spain’s Iberdrola, Volkswagen will cover main traffic routes across that country. In Italy, Volkswagen will work with Enel to establish fast-charging stations along major highways and in urban areas. The automaker plans to spend about €400 million to expand its European EV charging network by 2025.
The company also said it would have 17,000 public fast-charging stations in China and was on track to reach 800 stations in the US through its Electrify America subsidiary by the end of 2021.
Starting in 2022, vehicles built on VW’s modular MEB electric vehicle platform will support bidirectional, or two-way, charging. “This will allow green electricity from the solar energy system to be stored in the vehicle and fed back into the home network if needed,” the company said. “Not only will customers be more independent of the public power grid, they will also save money and reduce CO2 emissions.”
VW plans to offer a range of products to enable this, including a home energy storage system and a mobile EV charger that is unconnected from the grid. This will enable car owners to “become their own utility,” the company claims.
The company also unveiled an adorable EV charger robot intended for fleet owners.
Volkswagen will need to boost its battery expertise and secure its supply chain if it is to deliver on its bold promise of making electric vehicles 50 percent of its sales in the US by 2030. The company recently unveiled a concept sedan called Trinity that it promised would feature “high range” and “short charging time” by 2026. The automaker’s mass-manufactured modular electric vehicle platform, or “MEB,” will serve as the foundation for this massive shift.
Volkswagen announced the MEB platform in 2018 as part of its multibillion-dollar push into electric vehicles. It consists of a modular battery pack that can scale to fit differently sized vehicles, a motor, and other electronics — basically all of the technical underpinnings required to make an electric vehicle move. All of Volkswagen’s upcoming ID-branded electric vehicles are being built on the MEB platform, and it will also power certain vehicles from Volkswagen Group brands like Audi, Seat, and Skoda.
Volkswagen has said it plans to sell access to MEB, an idea that already attracted Ford, which is going to build a commercial vehicle powered by the German automaker’s platform. But it is also open to partnering with startups. The first attempt, with Germany’s e.Go Mobile, fell apart after the small startup became insolvent.
VW, which is the second largest automaker in the world based on volume, just released its first pair of long-range EVs, the Europe-only ID 3 hatchback and the ID 4 compact SUV, which just started making deliveries in the US.
Initially, the ID 4’s battery pack, which is comprised of 288 pouch cells in 12 modules, will be produced by South Korea’s LG Chem. But once ID 4 production shifts to Chattanooga, Tennessee, in 2022, the batteries will be supplied by SK Innovation, another South Korean company that recently opened a $2 billion factory nearby VW’s plant there.
Before the event, reports surfaced that VW would be pivoting away from its main battery supplier, South Korea’s LG Chem, and was turning to China’s CATL, according to Automotive News, citing South Korea’s Money Today online news site.
VW also has contracts with two other major battery producers, Samsung and CATL. And the company is backing a startup based in San Jose, California, QuantumScape, which is working on more energy-efficient solid-state batteries.
QuantumScape says its solid-state batteries will represent a significant improvement over conventional lithium-ion batteries, enabling electric vehicles that can travel 80 percent further than an EV with a traditional battery. They retain more than 80 percent of their capacity after 800 charging cycles, they’re noncombustible, and they’ll have volumetric energy density of more than 1,000 watt-hours per liter at the cell level, which is nearly double the density of top-rate commercial lithium-ion packs.
VW called solid-state batteries “the end game.”