Volkswagen Group's Self-built Battery Factory Has A Longer-term Significance

- Nov 22, 2019-

After the purchase of more than 60 billion US dollars, Volkswagen still chooses to build a self-built battery factory. This move has a deeper meaning through the public.


On June 13th, Volkswagen Group jointly invested in the development and production of batteries for 900 million euros from Swedish battery manufacturer Northvolt. Volkswagen Group said it will acquire about 20% of the shares of Northvolt in the early days. It plans to set up a joint venture company with a 50:50 stake in the company during the year to build a battery factory in Germany, or to locate the Lower Saxony region of Germany.


The news shows that the battery factory will start construction in 2020, and will initially reach 10Gwh annual capacity. In the future, it will climb to 16Gwh annual production capacity, and begin to produce special batteries for Volkswagen Group at the end of 2023 or early 2024.


It is worth noting that the Volkswagen Group's relationship with Northvolt began as early as Volkswagen Scania's investment in Northvolt. In 2019, the two sides reached a cooperation to form the European Battery Alliance, which will be based on cooperation from seven EU member states. Partners will join in to promote the progress of the European battery industry.


It should be emphasized that the Volkswagen Group stated that the investment in this project can be supported by the German Federal Ministry of Economic Affairs and the Ministry of Energy. As a result, the Volkswagen Group's self-built battery factory has a longer-term significance.


Who is Northvolt?


In October 2016, two former executives from Tesla founded Northvolt and made the mission of producing the most environmentally friendly batteries. For a time, Northvolt was optimistic in Europe. After three months, Northvolt got from Vattenfall, Stena. , InnoEnergy, the Swedish Energy Agency and Vinnova's five-party initial financing of 12 million euros.


Due to Northvolt's corporate goals and development plans that favor recycling, Northvolt was once considered "the Ningde era in Europe." Later, the first Northvolt laboratory was built in the “environmentally-friendly” Sweden, which was a solid first step for the company in Europe.


Until February 2018, Northvolt developed the first battery module prototype, NorthvoltBatterySystems, driven by customer demand, and delivered the first test unit one month later. At this time, Northvolt really entered the sight of European car companies.


After launching a series of industrial partnerships and receiving support from the European Investment Bank and the Swedish Energy Agency, Northvolt began construction of the Northvolt Laboratory in Vasteras. This move marks the first step in establishing a manufacturing value chain for large-scale lithium-ion batteries in Europe. Currently, three plants are under construction, and as NorthvoltLabs is about to be completed, Northvolt's first prismatic battery is about to go into production.


It is understood that Northvolt has obtained two environmental licenses, and the production capacity has reached 16Gwh/year. In June of this year, Volkswagen Group and Goldman Sachs jointly led the 900 million euro equity financing. In addition, Northvolt officially revealed that most of NorthvoltEtt's battery production has been sold, and the total value of orders in 2030 will exceed $13 billion.


Perhaps no one thought that Northvolt, as a battery startup, could achieve this development in just three years. However, this is inseparable from the support of the EU and local governments.


Battery ≈ electric car


According to the plan of the Volkswagen Group, in the next 10 years, Volkswagen will introduce nearly 70 new electric vehicles to the market. In the future, new energy vehicles based on the group's electrification platform are expected to reach 22 million. At the same time, Volkswagen predicts that the demand for batteries in Europe and Asia alone will increase to more than 300Gwh per year.


At the same time, Volkswagen's electric vehicle production capacity is expanding rapidly. The Zwickau plant will be put into operation in 2019. It is expected to have a production capacity of more than 300,000 units. It will be the highest-capacity pure electric vehicle factory in Europe. Coupled with Volkswagen's electric vehicle production capacity in China, incomplete statistics will exceed 930,000 at the end of 2020.


At present, the Volkswagen Group's enterprises in China have also signed strategic cooperation agreements with Ningde Times and Guoxuan Hi-Tech, and there are rumors that they will cooperate with BYD in power battery production. Although Volkswagen has already signed more than $60 billion in battery orders, Volkswagen believes that this is far from satisfying Volkswagen's production capacity. Volkswagen predicts that these orders will only be supported until 2025.


In addition, the power battery industry has already experienced a situation in which capacity is in short supply. Due to insufficient supply of Panasonic batteries, Tesla limited the production of Model3. The shortage of LG's chemical power battery also affected the production capacity of Audi e-tron. Audi had to reduce the capacity of this year's electric SUV from 55,830 to 45,242, and delayed it. The massback version of the production time is up to next year.


According to the calculation of relevant institutions, the cost of the battery is equivalent to 60% of the cost of the whole vehicle. According to the domestic market price, the price of the ternary lithium battery is about 1.5 yuan / wh, and the cost of the ternary battery is less than 0.9 yuan / wh. It can be inferred that the self-produced battery can effectively reduce the production cost of the electric vehicle.


It is believed that in the face of such a large demand, the public is reluctant to become a passive party in the industrial chain and thus generate dependence. Therefore, the self-built battery factory will be the greatest protection for its own enterprise.


Passively changing active European batteries are more promising


In fact, the capacity of the head enterprises in the power battery industry is limited, but the customers are constantly flowing. For the late arrival companies, it is difficult to bind high-quality resources in a short period of time. Therefore, some industry experts believe that the public The practice is worth learning from the car companies.


The expert also said that compared to the Chinese and even Asian power battery companies, the European power battery field is very famous, and the reason why Northvolt can be developed in a short period of time, part of the reason is this. Now, the Ningde era is about to build a battery factory in Europe, but this factory can only be assembled, and the core technology is still held by the Ningde era. That is to say, it is difficult for Europe to obtain the core technology of power battery manufacturing. According to industry experts, based on the current development of power batteries in Europe, no matter which company is likely to become an industry head enterprise, and the probability is great.


At the same time, Li Wanli, an expert on the expert committee of China International Engineering Consulting Co., believes that when a large number of European car companies and external battery companies sign orders, part of the funds flow to the outside. Due to the EU's current control over the anti-monopoly situation, the EU also hopes to see its own power battery companies in Europe to serve domestic car companies. In the case of cooperation between Volkswagen and Northvolt, the financial support of the German Federal Ministry of Economic Affairs and the Ministry of Energy also satisfies the national will of this cooperation.


The data shows that China's pure electric vehicle sales have exceeded 3 million, and 50% of the world's electric vehicles are in China. Li Wanli said that the reason why China's electric vehicles can develop rapidly depends on the leading role of the national policy. This top-down behavior makes China's electric vehicles develop faster than Europe. In Europe, most of them are bottom-up. There are still restrictions on parliamentary regulations, which has led to differences in the development of power batteries in Asia and Europe.


The participation of this cooperation by German national institutions may infer that Germany and the EU have a tendency to have policy guidance for the power battery industry. This phenomenon, Li Wanli and many industry experts believe that the "Asian phenomenon" has affected "European behavior" to some extent.


In addition, some institutional analysts said, "Power battery is still the development of the past decade. I believe that Volkswagen also saw the future of power batteries, as well as the opportunity of power batteries in Europe, after 60 billion orders still choose to build their own factories."