VW says it needs '40 gigafactories' for electric-car batteries by 2025


Tesla Gigafactory battery plant in Nevada

VW Group remains one of the world's three largest carmakers, along with Toyota and General Motors, but the German automaker foresees challenges ahead.

Specifically, Volkswagen believes the industry will face a shortage of lithium-ion batteries if new investment is not made soon for additional cell fabrication factories, often referred to using Tesla's coinage of "gigafactories."

Ulrich Eichhorn, Volkswagen research and development chief, believes the equivalent of 40 Tesla gigafactories will be needed to stave off a shortage of batteries for the volumes of electric cars VW plans to sell.

DON'T MISS: 2017 Volkswagen e-Golf: first drive of updated 125-mile electric car

During a June 30 presentation at the automaker's proving ground, Eichhorn made the prediction, according to Automotive News (subscription required).

"We will need more than 200 gigawatt-hours," Eichhorn said: the equivalent of more than 3 million electric cars with 60-kilowatt-hour battery packs.

Eichhorn's comments came after earlier warnings by Volkswagen CEO Matthias Mueller, who estimated an "enormous purchasing volume" will be needed by the year 2025.

2017 Volkswagen e-Golf

2017 Volkswagen e-Golf

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Assuming other automakers prepare similar electric-vehicle sales goals, VW predicts a total of 1.5 terawatt-hours per year will be required within the global automotive industry.

However electric cars evolve, and through any potential battery-supply crisis, Volkswagen suggests, it will have an edge over its rivals.

The automaker believes its dedicated "MEB" electric-car architecture will give it sizable cost advantages over Tesla, the industry's collective target.

READ THIS: VW to Tesla: 'Anything you can do, we can do better'

In the meantime, Volkswagen will work to become a leaner and more efficient automaker as it starts to focus on success in the electric-car field.

There's also the matter of jobs within the manufacturing sector.

German unions have pushed to keep as much cell manufacturing and battery-pack assembly as possible within German automakers, rather than third-party suppliers.

Volkswagen I.D. Buzz concept, 2017 Detroit auto show

Volkswagen I.D. Buzz concept, 2017 Detroit auto show

Enlarge Photo

Many automakers have resorted to outsourcing battery and cell production—Tesla uses Panasonic, while GM works with LG Chem.

Add in the fact electric cars and their motors require significantly fewer moving parts, and hence less assembly work.

That means that a decline in jobs becomes a critical worry for unions looking at future employment and membership.

CHECK OUT: Electric cars necessary to protect Mercedes jobs, says labor leader

Any future investment in battery factories, which tend to be very highly automated, will likely be watched closely by unions.

Within the huge VW Group, the Volkswagen brand has put an aggressive electric-car strategy in place following its diesel scandal.

The first of its electric cars will likely arrive for 2020, and it continue to launch multiple models in each of the succeeding years.

Volkswagen I.D. electric car concept, 2016 Paris auto show

Volkswagen I.D. electric car concept, 2016 Paris auto show

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Production version of the I.D. compact hatchback, I.D. Buzz "new Microbus," I.D. Crozz crossover utility, and other vehicles will fill out VW's near-term electrification strategy.

Each nameplate will be crucial to Volkswagen's goal of 1 million electric cars sold by the year 2025.

It may be, however, that the majority of those electric vehicles are sold not in Europe or North America but in China, where VW remains strong.

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