Volkswagen Invests In A Battery Plant Of Nearly 1 Billion Euros. It Will Push 20 Electric Models In The Future

- Nov 14, 2019-

Volkswagen will promote the secrets of motorized electricization. In the next six years, Volkswagen will launch 20 battery-powered models, which means it needs a large number of battery units. In order to ensure the supply of battery cells, Volkswagen has decided to put it into production.

Volkswagen Group released a press release on Monday (May 13, local time) that Volkswagen will invest nearly 1 billion euros in a battery unit production facility in Lower Saxony, Germany. It is worth mentioning that just before the above announcement, Volkswagen just announced that it will update the equipment of the Zwickau factory, also located in Lower Saxony, to build it into an exclusive production plant for electric vehicles.

Lower Saxony Governor Stefan Weil pointed out in a statement: "The decision made by the Volkswagen Supervisory Board today marks a breakthrough in the production of battery cells in Lower Saxony. As the headquarters of the Volkswagen Group, the battery is put into production. The unit is of utmost importance to us. This is a positive sign for the Salzgitter region, and I am optimistic about the prospect of the battery unit being put into production in Germany by virtue of its competitive position."

In a press release issued by the Volkswagen Group, it also revealed that it will cooperate with a partner company in the operation of the battery unit production facility in Lower Saxony, but declined to disclose the identity of the partner.

Some analysts speculate that this partner is the German battery manufacturer Varta. It is worth mentioning that the German government has recently invested in Valta to help the latter's electric vehicle battery unit production plan.

HansDieter Pötsch, chairman of the Volkswagen Supervisory Board, said in a statement: "As part of our comprehensive electrification campaign, we plan to work together to ensure our battery capacity. At the same time, we hope to expand in Europe. Battery capacity to support our business growth plans. Given the unprecedented complexity and challenges of the industry in which Volkswagen is located, we need to focus on our core business areas."

"Slimming" program

Reuters website revealed that while Volkswagen Group announced plans to invest nearly 1 billion euros in battery unit production facilities, Volkswagen is seeking to simplify the group's business by divesting or selling part of its business.

It has been pointed out that battery cells are a core battlefield for the automotive industry to transform into electric mobility. At present, the main battery unit purchase targets of the entire industry come from Asian manufacturers.

The Volkswagen Group also said it is studying the disposal options of its MANEnergySolutions, whose main business is to produce large diesel engines suitable for ships and generators. In addition, Volkswagen is also considering the future fate of the gearbox manufacturer Renk, which may Options include building a joint venture, partnering with other companies, and selling them in whole or in part.

Reuters reported earlier this month that Volkswagen has approached some companies to assess its interest in acquiring MANEnergySolutions, which can be valued at around €3 billion in potential sale deals.

It is worth mentioning that the above action is part of Volkswagen Group CEO Herbert Diss's “slimming” plan for the public. The Volkswagen Group has 12 brands and its business covers trucks, buses, motorcycles, cars and electric bicycles.

Volkswagen also said it will resume preparations for the implementation of its IPO for its truck business unit, Traton. Due to market instability, Volkswagen stopped Traton's IPO plan in March this year.

Battery shortage

As Tesla's main battery supplier and partner of Gigafactory1, Matsushita said that ModelY's production next year will lead to a shortage of batteries in the factory.

Last month, a report from Asia reported that Tesla and Panasonic had suspended their expansion investment in Gigafactory1. Tesla denied the report to some extent, saying they still plan to continue investing, but they want to focus first on increasing production from existing equipment. The company's CEO, Elon Musk, subsequently confirmed that although Panasonic has invested 35 kWh of annual battery capacity, its current capacity is limited to 23 kWh.

In Panasonic's latest earnings report, CEO Kazuhiro Tsuuga said that they plan to increase production this year to 35 kWh. After the Panasonic CEO said that he needs to talk to Tesla. He said that there is currently not enough capacity to meet Tesla's expanding business, especially the Y-type car that will be put into production. "If Tesla starts selling ModelY and expanding its business next year, the battery will run out. What do we do? This is one of the topics discussed with Tesla, including the production of batteries in China."

Last month, Tesla said it still decided to produce ModelY at its Fremont plant in California or at the Gigafactory1 plant in Nevada. The automaker is planning to begin production of ModelY in the fall of 2020. However, Tesla has not confirmed the production of a Model 3 battery supplier at the new Super Factory 3 in Shanghai, which is expected to be commissioned later this year.

Analysts say the battery supply problem is a must for all car manufacturers planning to mass-produce electric vehicles. For Tesla, the answer for the past few years has been simple: they have a strong relationship with Panasonic and they are expanding production at the Gigafactory2 plant.

But now, with the apparent delay in the production of Super Factory No. 1, and Tesla's plan to significantly increase the production of Y-type cars, the situation has begun to become somewhat blurred. It is speculated that it takes only a few months to start production at the Gigafactory3 plant, and ModelY's production only needs to wait for more than a year, so if you can get out of Tesla's battery supplier as soon as possible, it will be a Good thing. It is speculated that Tesla will soon negotiate another investment with Panasonic to significantly increase the output of Gigafactory.