VW is reportedly paying less than $100 per kWh for the battery as it is trying to secure battery cell supply for its ambitious electric vehicle plans through a mix of supply deals and making its own cells at a new battery gigafactory with Northvolt.
In the next 10 years, VW plans to produce around 22 million electric vehicles between 70 new electric models.
These electric vehicles are going to require an incredible amount of battery cells.
VW’s annual capacity requirements in Europe alone from 2025 are in excess of 150 GWh, with similar demands expected in Asia.
The German automaker has been making deals with existing battery cell manufacturers, like LG, Samsung, and CATL.
With over $40 billion issued in battery contracts, they are reportedly getting some good prices from those manufacturers.
According to VW executives talking to the New York Times, VW is buying battery cells for the ID.3 for less than $100 per kWh:
“Another executive, who declined to be identified because the company had not officially disclosed a figure, confirmed that Volkswagen was paying less than $100 per kilowatt hour for batteries.”
It’s unclear if they are talking about battery cell cost or battery pack cost.
That’s the figure that has often been referenced as the price point where electric vehicles become cheaper than gasoline-powered cars.
Tesla has previously claimed that it would achieve a $100 kWh battery cell cost by the end of 2018.
Volkswagen is also moving to make its own battery cells through a partnership with Northvolt.
Northvolt is a battery startup founded by two former Tesla executives who worked on Tesla’s Gigafactory 1 in Nevada with Panasonic.
The Swedish startup received investments from several companies, including Volkswagen, to build a massive battery factory in Sweden.
Volkswagen’s investment also came with the option to create a 50/50 joint-venture with the startup to build another battery factory to supply the automaker.
The two companies have now announced that they finalized the joint-venture:
“The finalization of the joint venture is the result of an agreement which both parties concluded in June. Part of the approximately 900 million euros invested by Volkswagen is now flowing into the joint venture. Another part goes directly to Northvolt. In return, Volkswagen has received about 20 percent of the shares in the Swedish battery manufacturer and a seat on the Supervisory Board.”
Dr. Stefan Sommer, Member of the Volkswagen AG Board of Management responsible for Procurement and member of the Supervisory Board of Northvolt AB, commented:
“The battery cell is the key component for electric mobility. Therefore, Volkswagen and Northvolt are together pushing ahead efficient cell production in Europe to accelerate their joint battery activities. With the founding of the joint venture and the planned construction of a battery cell factory in Salzgitter, we are making a decisive contribution to establishing the core battery cell technology in Germany as well.”
They plan to start construction in Salzgitter (Lower Saxony) in 2020 and start production with an initial capacity of 16 GWh, making it a gigafactory, in 2024.
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