Volkswagen is reportedly considering building its own battery factory as part of a large commitment to electric cars.

The company is targeting sales of more than 1 million electric cars within 10 years, potentially as many as 3 million—with large numbers of those destined for China.

That total will include sales not only  from the main Volkswagen lineup but also other VW Group brands like Audi and Porsche.

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To supply battery cells for all of those cars, Volkswagen may build its own cell fabrication and battery assembly plants, according to German business newspaper Handelsblatt.

VW's non-executive supervisory board reportedly considered the plan before the company's annual meeting June 22. A decision is expected before the end of the year.

[EDITOR'S NOTE: This story was originally published on June 1, 2016. We have updated it to reflect more recent reporting by Bloomberg on potential battery-cell partners for Volkswagen.]

Volkswagen Budd-e Concept

Volkswagen Budd-e Concept

The battery factory already has apparent support from Volkswagen's works council and the German state of Lower Saxony, its largest shareholder.

Lower Saxony would also be the likely location for one battery factory, at a cost of 1.7 billion to 2 billion euros ($1.9 billion to $2.2 billion). The total plan for multiple factories could cost 10 billion euros ($11.2 billion).

The possibility of such a Volkswagen battery factory in Germany was first reported by German business newspaper Handelsblatt.

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To reach its 1-million-unit goal, VW will likely rely heavily on the MEB platform for compact electric cars announced last year.

The company has also announced an electric version of the next Volkswagen Phaeton luxury sedan, as well as production versions of the Audi e-Tron Quattro SUV and Porsche Mission E sedan concepts. Those luxury models will likely sell in somewhat low volumes, however.

In addition to supplying larger volumes of electric cars, the goal of owning battery factories would reportedly be to help VW operate independently of suppliers like Panasonic, Samsung, and LG Chem.

Volkswagen Budd-e Concept

Volkswagen Budd-e Concept

The two South Korean firms are already committed to supplying battery cells for the Audi electric SUV, which is due in 2018.

They are reportedly among the top contenders to provide cell fabrication technology and manufacturing for future VW plants.

Tesla is working closely with Panasonic on its massive battery "gigafactory" in Nevada, with the Japanese company contributing technical knowledge and funds.

General Motors engaged in a far-reaching partnership with LG in which the Korean company developed numerous components for the Detroit firm's Chevrolet Bolt EV electric car.

Other companies find no issue with buying battery cells from suppliers.

Volkswagen e-Golf and e-Up electric cars

Volkswagen e-Golf and e-Up electric cars

Daimler recently announced plans to triple production capacity for battery packs at its Deutsche Accumotive battery subsidiary.

The company will spend 500 million ($550 million) on a second battery plant, which will produce packs with cells manufactured by South Korean suppliers.

Daimler shut down its cell subsidiary Li-Tec last year, saying it simply wasn't economical to make cells itself in Germany.


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