Volkswagen Group’s plan to develop the world’s largest electric-car fleet requires an unprecedented overhaul of its factory network, a quantum leap in software and a whole lot of batteries.
During its “Power Day” event on Monday, VW will brief investors on the cells and packs that will support its goals to go electric.
The company aims to at least double its share of deliveries that are fully electric this year, which would bring it within striking distance to Tesla’s EV sales.
The event is the third battery-related showcase by a major automaker in the last year. General Motors staged one in March 2020, followed by Tesla in September. The companies are competing to win over consumers still driving combustion-engine cars and to prove they have both the partners and internal expertise to ramp up production.
“Batteries are the new battleground,” UBS Group AG auto analyst Patrick Hummel said in a webcast last week.
VW boasts the most comprehensive EV plan in the industry, with intentions to add about 50 purely battery-powered vehicles to its lineup by 2030. Existing models include the VW ID3, Audi e-tron and Porsche Taycan. The automaker also wants to roll out around 30 new hybrid cars.
Reducing battery costs will be key to improving slim returns on early electric cars, particularly for mass-market models. The expected rise in demand is also sparking concerns about supply bottlenecks for raw materials. Nickel is Tesla’s biggest concern for scaling production of lithium-iron battery cells, CEO Elon Musk said last month.
Given VW’s plans to make some 26 million fully electric cars by 2030 and around 7 million hybrid vehicles, batteries are a make-or-break matter of importance. Two years ago, the company said it would need more than 150 gigawatt hours of annual battery capacity for Europe in 2025 and roughly the same amount in Asia.
“VW was early to lock in supply agreements with the major battery manufacturers,” said John Goetz, managing principal at Pzena Investment Management, a New York-based firm with $46 billion under management.