June 16, 2021

Gp Delivers

The excellent automotive artisans

VW takes a battery idea from rival Tesla

Whether upstream or downstream, the shift toward greater vertical integration is here to stay, argues Peter Fuss, senior adviser for EY’s automotive team in Germany.

“Carmakers see what’s happening in [the EU] — one way or the other, they have to sell these cars, and they cannot wait until some municipality gets around to installing charging stations,” he said. “Nor can they afford to become dependent on suppliers for such a critical component of an EV. We’ve already seen what this can do for semiconductors and battery cells.”

To aid the industry and ensure access to the needed inputs, European policymakers have been aggressively supporting the local production of battery cells with a goal of achieving 30 percent of the world’s output. Volkswagen’s Swedish cell partner Northvolt was initially funded by the EU’s development bank before VW acquired a strategic stake.

Jeep and Ram parent Stellantis is likewise teaming up with a French battery company to eventually produce in Europe an annual supply of 48 gigawatt-hours of cells jointly.

Fuss says smaller carmakers will eventually follow, as outsourcing this entirely is a losing proposition.

Volkswagen’s decision put BMW on the spot last week. Executives fielded questions from reporters on whether they would follow with their own cell production and potentially — mimicking Porsche — a network of charging station parks with exclusive lounges.

BMW CEO Oliver Zipse’s management team didn’t see sense in following VW’s lead, arguing it was “clearly wrong” at this stage to invest in its own industrial scale cell production. But the executives did voice concerns about infrastructure.

“The expansion in the charging network in Germany, and even more so in Europe overall, is too slow. At the moment, demand for battery-electric vehicles is growing four times as fast,” Zipse said. “But it doesn’t make a lot of sense to invest in charging infrastructure that is only accessible by BMW clients.”