Volkswagen teams up with Panasonic and LG Chem for EV battery production

Volkswagen AG is teaming up with electric-car battery specialists such as LG Chem Ltd. and Panasonic Corporation to establish its own battery gigafactory.

8/9/16 5:00 am chumakdenis 1

Volkswagen AG is teaming up with electric-car battery specialists such as LG Chem Ltd.  and Panasonic Corporation as it overhauls its strategy to emerge from the diesel-emissions scandal.

The carmaker’s supervisory board has also discussed investing 1.7 billion euros ($1.89 billion) to 2 billion euros per factory at several sites around the world.

Concrete decisions are expected by the end of the year, they said.

Choosing appropriate location

Volkswagen confirmed it is examining options and considering multiple locations to make batteries for a sales volume of between 2 million and 3 million purely electric-powered cars by 2025, declining to comment on details of the potential sites.

6314.jpgThe push is a part of Chief Executive Officer Matthias Mueller’s attempt to move beyond last year’s admission to systematic cheating on diesel pollution controls.

“For a global manufacturer like Volkswagen, we surely wouldn’t just talk about one site, but about several assembly facilities to serve the most important production locations,” the company said in an e-mailed response to questions.

“It’s too soon to say where the factories will be situated”, Volkswagen said.

Booming Chinese market

6313.jpgChinese electric-vehicle subsidies will probably drive growth in the battery market, now 80 percent controlled by four Asian companies, including Panasonic and LG Chem, Deutsche Bank analysts wrote in a report last month.

Volkswagen would need as much as a decade to catch up with established players, even as falling battery prices remove some of the incentive for a large capital investment, the analysts wrote.

“This should be a combined industry effort,” potentially through joint ventures between battery makers and auto suppliers, the analysts wrote.

Spokesmen from Panasonic and LG Chem declined to comment.

Some other rivals

Matching rivals including Toyota Motor Corporation and Nissan Motor Corporation on electric cars is a cornerstone of Volkswagen’s effort to rebound from the emissions crisis, the worst in its corporate history. Mueller’s 2025 road map also envisions Volkswagen reaching a leadership position in technology for self-driving cars and mobility services such as ride-sharing.

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“Battery technology is a key competence for electric mobility, which will see its breakthrough toward a mass market in coming years,” VW said.

“Sales of as many as 3 million electric cars by 2025 imply the necessity to look intensively into this issue.”

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