VW announces electric vehicle production plans with 16 sites, $25 billion in battery cell contracts

As we discussed in the latest episode of the Electrek Podcast, Volkswagen’s electric car efforts mostly consist of press releases and concept vehicles at this time, but they seem quite serious about it based on their investments.

Today, the company unveiled its electric vehicle production plans with 16 production sites and a massive ~$25 billion investment in battery cell contracts.

The production plan is an update on the original plan called “Roadmap E” announced last year.

The update was unveiled by CEO Matthias Müller in Berlin today. He said:

“Over the last few months, we have pulled out all the stops to implement ‘Roadmap E’ with the necessary speed and determination. When “Roadmap E” was launched last fall, Volkswagen announced plans to build up to three million electric vehicles annually by 2025 and market 80 new electric Group models. This year, another nine new vehicles, three of which will be purely electric-powered, will be added to the Group’s electric portfolio of eight e-cars and plug-in hybrids.”

Müller said that they have designated 16 production sites that will start producing electric vehicles by 2022.

The other big announcement was the fact that they have already awarded battery cell contracts worth 20 billion euros for the production of their EVs in Europe and China:

“To ensure adequate battery capacity for the massive expansion of environmentally-friendly electric mobility, partnerships with battery manufacturers for Europe and China have already been agreed. The contracts already awarded have a total volume of around EUR 20 billion.”

The German automaker said that “a supplier decision for North America will be taken shortly.”

It doesn’t mean that VW is going all-electric though.

The company still reiterated its commitment to “conventional vehicles”, which we assume means diesel and gasoline vehicles.

Müller added:

“We are putting almost EUR 20 billion into our conventional vehicle and drive portfolio in 2018, with a total of more than EUR 90 billion scheduled over the next five years.”

It’s more than the $84 billion (81 billion euros) investment in electric cars and batteries that they plan to make over the same period.

Electrek’s Take

While Volkswagen is still investing a lot more in gas and diesel-powered vehicles than all-electric vehicles, it’s still a big enough investment to move the needle, especially when it comes to battery production.

It’s not clear which companies are getting the $25 billion worth of contracts in Europe and China, but I can’t imagine that it doesn’t mean a significant production increase over the period of the contracts.

I wouldn’t be surprised if suppliers like LG Chem and CATL are going to benefit from this directly and the entire battery industry is going to benefit from it indirectly by locking up a lot of production capacity.

We probably won’t see the fruits of this investment in volumes until the next decade, but it’s nonetheless exciting.