Monday a series of Volkswagen executives presented a comprehensive look at what the company is calling an end-to-end, closed-loop approach to become one of the top global producers of electric vehicles.
Most importantly, on the way to EV affordability and profitability, the company outlined plans to potentially halve its battery costs for its most affordable electric vehicles, while cutting cell costs in the most popular EVs by 30%. Through these changes, VW hopes to drive the cost of “battery systems”—thus including the pack—below 100 euros ($119) per kwh on average.
VW plan to cut battery costs by 50% in a decade
As outlined by Frank Blome, the head of battery cells at VW Group—and also a board member at QuantumScape, a company VW has invested in—the solid-state battery technology that will likely arrive later in the decade will be able to get an 80% charge in as little as 12 minutes. That’s about half the time required by the fastest charging today for vehicles with liquid-electrolyte lithium-ion cells today.
VW's closed-loop plan for battery production
Prior to that, VW plans to focus on a new “prismatic unified cell” due to be launched in 2023 and installed in 80% of VW Group EVs by 2030. According to the company, it “offers the best conditions for the transition to the solid state cell—the next quantum leap in battery technology, which Volkswagen anticipates for the middle of the decade.”
Just in Europe, Volkswagen plans six gigafactories, producing a total of 240 GWh annually, by the end of the decade.
The first of those factories, powered by renewable energy and supplying European vehicle production, will be in cooperation with Northvolt in Skellefteå, Sweden, with production starting in 2023. Those will be premium cells, while a German plant that’s already operated by VW will be producing the unified cell from 2025, and developing “innovations in process, design and chemistry.”
A big pivot for VW
The announcement pivots Volkswagen toward being an energy-storage producer rather than what it stated clearly in late 2019: that it wanted to maintain close control over cells but not make them. Earlier in 2019, the automaker reported that it had secured cell production for the first several years of global production of its mass-market EV models—including the ID.4 electric crossover—with LG Chem, Samsung, SK Innovation, and CATL.
Having less direct control over the process, however, can introduce situations like what VW faces in the U.S. Due to an international-trade row, sales of cells from its choice for the Tennessee-built ID.4, Georgia-made cells from South Korea’s SK Innovation, could potentially be banned.
Greatly reducing the cost of the battery will allow Volkswagen more flexibility on pricing and market competitiveness with internal combustion vehicles; and it helps assure that most or all of the EVs VW produces will be profitable.
“We will use our economies of scale to the benefit of our customers when it comes to the battery too,” said Thomas Schmall, the VW Group board member for technology.
Volkswagen battery recycling
The company hopes also to save money through production methods and consistent recycling, it said—as it outlined earlier this month with news that it will be able to recover up to 95% of the raw materials from its EV batteries.
There will also be some innovations at the pack level. VW plans to use a strategy it calls Cell2Pack, in which the cells fit directly into the full pack, starting with Volkswagen’s next-generation EV platform arriving around the middle of the decade.
Along with its partners, the company intends to create about 18,000 public fast-charging points in Europe by 2025. This represents a five-fold expansion of the fast-charging network compared to today and corresponds to about one third of the total demand predicted on the continent for 2025.
The company said that it plans to partner in the establishment of 18,000 DC fast-charging stations in Europe by 2025—made possible through partnerships with BP, Iberdrola, and Enel, and a $360 million investment in European charging by 2025.
Volkswagen also plans to roll out bidirectional charging capability for some of its vehicles starting in 2022, allowing them, via its Elli energy-management business unit, to become “a mobile power bank,” potentially relying less on power from the grid and potentially tapping into power via solar energy management systems.