VW will make its own batteries to fuel an electric future

Four years after being trapped by the emission standards imposed by millions of diesel cars, Volkswagen has become the most zealous (at least externally) converts to an electric future. By 2028, it plans to offer 70 models powered by battery. To do this, it is necessary to refurbish 16 factories to build electric cars. This encourages suppliers to increase battery production and has already blocked battery supplies for 15 million vehicles, said CEO Herbert Diess at Automotive News late last year – a huge number even for a company that builds 10 million cars a year. But the conversion was not quite smooth. Last month, rumors surfaced that VW's luxury arm, Audi, would build 10,000 E-tron electric SUVs less than expected, due to a lack of battery.

Volkswagen now manages some of the battery construction work. It will spend nearly 1 billion euros ($ 1.12 billion) for the construction of a production plant near its German headquarters, in collaboration with an anonymous partner, announced Monday. Where most car manufacturers buy battery packs from suppliers or cells and turn them into packs, VW starts producing the cells themselves. The company has given little details on the commissioning date of the plant or its capacity. But it is a bold decision for a car manufacturer who, whatever his past sins, seems determined to dominate an era built around batteries.

VW is not the only manufacturer to rely heavily on electricity. General Motors, Ford, BMW, Mercedes-Benz, Volvo and others have announced plans to introduce a host of new EV models in the coming years. That does not take into account a series of 100% electric startups, many of which come from China, or the industry pillar, Tesla. While VW has the additional incentive to erase the Dieselgate scandal from public memory, the main factor is regulation. European countries such as France, the Netherlands, Norway and the United Kingdom plan to ban the sale of gasoline and diesel cars in the coming decades. The same is true of India, a fast growing market. And China, the largest automotive market in the world, applies the strictest rules in terms of electricity.

The problem is that everyone gets into batteries and VW wants to make sure that they will be able to get enough, even if that means making them themselves. In the short term, this could mean ensuring that suppliers can extract enough batteries, as the E-tron shortage clearly shows. In five or ten years, the concern might be to ensure that VW, not its myriad competitors, has the batteries that are manufactured.

If all this sounds familiar to you, it's because that's how Tesla works. Since 2016, Elon Musk's car manufacturer, in collaboration with Panasonic, has built its own batteries in its Gigafactory outside Reno, Nevada. Last year, it had reached a production rate that, if it had been maintained for a year, would have generated 20 gigawatt hours of energy, enough for 200,000 Tesla cars upscale of 100 kWh.

Whichever company helps VW manage its plant, it will probably play a key role. This is because building car batteries requires careful control of materials and manufacturing. Many smartphones use a battery cell. Therefore, if minor differences result in slightly different capabilities, it simply means that someone has a few more minutes on Twitter than someone else. However, even minor differences in the capacity or quality of the approximately 500 cells that make up a bag can affect the performance or safety of the entire vehicle. (Tesla uses smaller cells than most, its batteries contain 5,000 cells or more.) "The cells must be identical in quality," says Jay Whitacre, who heads the Scott Institute for Energy Innovation. Carnegie Mellon University. "Only the best producers can manufacture lithium-ion batteries for motor vehicles."

Nevertheless, there are enough producers – Panasonic, LG Chem, Samsung SDI, SK International and others – for it to be a buyer's market, says Whitacre. Car manufacturers can order prices rather low, which they wish to do for the most expensive electric vehicle. The biggest concern for automakers is closing the offer.

It is therefore not surprising to see VW take over part of this production. The construction of batteries in Germany, a few hours drive from more than half a dozen factories, should also help reduce shipping costs. According to Rebecca Ciez, a postdoctoral fellow at the Andlinger Center for Energy and the Environment in Princeton, the safety issues associated with exporting lithium-ion batteries can lead to additional costs as expensive as the batteries themselves.

Aside from Dieselgate, Volkswagen has become one of the world's largest automakers, with a reputation for scale and efficiency. Now that it is committed to reducing its emissions, it is doing everything it can to adapt its know-how to a different type of supply chain and manufacturing process. This new factory is only part of that. "With their global reach and volumes, more than any other company on the planet, it makes sense that they build their own batteries," says Karl Brauer, industry analyst at Kelley Blue Book. And perhaps, at the same time, rebuilding a reputation tarnished by diesel emissions, from the cellular level.

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