Tesla has competition coming thick and fast and likely the Volkswagen Group represents the biggest challenge to the world's most well-capitalised car maker. Volkswagen has announced that it has ordered $14 billion worth of battery cells from Swedish battery maker Northvolt and also increased its stake in the company.
Northvolt of course is a battery startup that was founded by former Panasonic executives who worked in the Tesla Nevada gigafactory where the Japanese tech giant has a huge operation. It was founded with the help of Volkswagen which provided it investment to build a massive battery factory in Sweden.
Northvolt now has received this massive order from Volkswagen which has just started to roll out its ID.3 and ID.4 electric cars, apart from having many EVs form its subsidiary brands like Audi, Porsche and Skoda.
Northvolt is a battery cell manufacturer based in Sweden
"Northvolt and Volkswagen Group today unveiled the next step in the partnership between the two companies, which was initiated in 2019. The collaboration will place a greater focus on Northvolt's gigafactory in Sweden, which will be further expanded to support a combined order worth more than $14 billion over the next 10 years as Northvolt is selected by Volkswagen Group as a strategic lead supplier for premium battery cells in Europe. In total, Northvolt has now secured in excess of $27 billion worth of contracts from key customers," said the two companies in a statement on the power day event for Volkswagen.
"Volkswagen is a key investor, customer and partner on the journey ahead and we will continue to work hard with the goal of providing them with the greenest battery on the planet as they rapidly expand their fleet of electric vehicles," said Peter Carlsson, co-founder and CEO of Northvolt.
"Volkswagen will continue to deepen the collaboration and partnership with Northvolt. They are one of our key battery suppliers as we make the transition to electric mobility - and there is potential to expand this partnership even further, added Thomas Schmall, the chairman of the board of management of Volkswagen Group of components.
Apart from this Volkswagen also announced that it planned on reducing the costs of batteries by 50 per cent. It also said that it wanted to have 80 per cent of all its vehicles including vehicles from its subsidiary brands.
in the wake of the diesel gate emissions scandal in the US, Volkswagen has made the largest commitment towards electrification
"We aim to reduce the cost and complexity of the battery and at the same time increase its range and performance. This will finally make e-mobility affordable and the dominant drive technology. Aside from the planned in-house production, significant cost benefits are expected primarily thanks to the new unified cell. It is set to be launched as of 2023 and will be installed across brands in up to 80% of all-electric vehicles in the Group in 2030. Further savings will be delivered by optimizing the cell type, deploying innovative production methods as well as consistent recycling. Volkswagen is thus aiming to gradually reduce battery costs in the entry-level segment by up to 50% and in the volume segment by up to 30%," added Thomas Schmall.
The plan is to reduce the cost of battery systems below the 100 euro mark per kilowatt-hour. Alongside this, the plan involves the creation of six new gigafactories in Europe alone with a production capacity of 240-gigawatt hours by the end of 2030.
Volkswagen has also announced partnerships to accelerate the proliferation of charging infrastructure for its electric vehicles. It has new deals with BP in the UK, Iberdrola in Spain and Enel in Italy. In North America as a part of the deal Volkswagen made with the EPA post diesel gate it has the Electrify America subsidiary and now it plans on having more than 3,500 charging stations by the end of the year.
Even in China, Volkswagen is planning a total of 17,000 charging points by 2025 VIA a JV with CAMS.
