Volkswagen to build battery manufacturing plant with Swedish startup NorthVolt

Volkswagen said it has opened a power battery test production line at its Center of Excellence in Salzgitter, Germany, with about 300 experts involved in the development, which is seen as another milestone for Volkswagen's entry into the electric vehicle market. In the future, Volkswagen will build a complete battery manufacturing plant here with Swedish startup NorthVolt.

It is understood that just a few weeks ago, Volkswagen reached an agreement with Sweden's NorthVolt to jointly establish a joint venture to build a battery production base. NorthVolt was founded by two former Tesla executives who worked with Panasonic technicians at Tesla's Gigafactory 1. Volkswagen may have chosen to invest in and cooperate with NorthVolt because of its battery technology strength.
 

As early as June 2019, Volkswagen Group invested approximately 900 million euros to establish a joint venture with Northvolt in which it holds equal shares, and it is clear that it will build its own battery factory with Northvolt in the future. According to the current information, the joint venture between Volkswagen and Northvolt is scheduled to start construction in 2020 and will be put into production in 2024.

In other words, Volkswagen's plan to build its own battery factory is progressing smoothly and in an orderly manner. At the same time, Frank Blome, director of the Salzgitter Center of Excellence, told the media: "We will familiarize ourselves with the production process as soon as possible and ensure the performance, cost and quality of the products. The experience gained will also help us master the entire process of lithium-ion batteries from raw material research to production and recycling."

It is understood that Volkswagen plans to produce nearly 70 new electric models in the next decade, and their total sales may reach 22 million. Such a large number of electric vehicles will generate an astonishing demand for power batteries. It is estimated that by 2025, Volkswagen's demand for power batteries in Europe alone will reach 150GWh. Currently, the automaker mainly relies on Samsung, LG and CATL to supply it with power lithium batteries.

However, this method of purchasing batteries through suppliers is not suitable for Volkswagen. On the one hand, it is subject to the production capacity of suppliers, and it is easy to have insufficient battery supply and be forced to reduce the production of electric vehicles. On the other hand, it is difficult to effectively control costs through this procurement method.
 

Therefore, Volkswagen's self-production of batteries is an inevitable result. However, even though Volkswagen has already started trial production of power batteries, according to the previously announced plan, the battery factory will start construction in 2020 and will be put into production as early as 2024. The initial annual production capacity is only 16GWh, which can only meet the battery needs of about 40,000 electric vehicles. This also means that Volkswagen electric vehicles will not use their own power batteries until 2024 at the earliest. In other words, the power battery packs of new energy vehicles including ID.3 will continue to be provided by suppliers.