The race to dominate the electric car industry may be tightening as Volkswagen, the German auto giant and looming Tesla rival, unveiled plans on Monday to cut battery costs and operate a broad charging network.
In its very first ‘Power Day’, reminiscent of Tesla’s TSLA,
The much-hyped “Battery Day,” the German group that owns the Volkswagen, Audi and Porsche brands, said it would rely on six giga factories in Europe to secure supplies as the industry faces an imminent shortage. .
Shares in Volkswagen Group VOW,
VWAGY,
VWAPY,
up about 3% on Monday as the company’s top executives outlined a roadmap for technology expansion.
Electric vehicles have become the company’s core business in Wolfsburg, Germany, said Herbert Diess, the group’s chairman of the board, and the new plans come as the battle to dominate the burgeoning electric vehicle space intensifies.
Also read: Forget about Nio and XPeng. This company and Tesla will be the top two electric vehicles by 2025, UBS says.
According to UBS analysts, EVs could reach 100% penetration of the automotive market by 2040. In the coming years, Swiss banks expect Volkswagen and Tesla to become market leaders, with the German company expected to overtake Tesla. in terms of the total number of electric vehicles sold from next year.
Volkswagen ousted Tesla from its top spot in the European EV market in 2020 and now has a 20% to 25% market share in this important region. Europe is the world’s second largest electric vehicle market after China, home to domestic EV manufacturers including Nio NIO,
XPeng XPEV,
and WORLD 1211,
As auto companies scramble on an industry-wide pivot towards electric mobility, UBS said it expects the supply of battery cells needed to meet demand this year will face “regional tightness this year and global shortages by 2025”.
To secure the batteries needed for expansion, Volskwagen said it will be dependent on six giga factories by 2030. The first factories will be in the Swedish cities of Salzgitter and Skellefteå, where Volkswagen is building a factory with partner Northvolt.
Read more: Northvolt, backed by Volkswagen and Goldman Sachs, snaps Cuberg in Silicon Valley as electric vehicle battery race heats up
Northvolt said on Monday it had received a $ 14 billion order from Volkswagen for premium battery cells. The German group also increased its ownership stake in the Swedish company, founded by a former Tesla employee with backers including Goldman Sachs GS,
and Spotify SPOT,
General Manager Daniel Ek.
In addition, Volkswagen said it wants to cut the cost of its batteries – the most important factor in lowering the overall cost of vehicles – by as much as 50% over the next decade.
Cost savings in one form or another will be seen from 2023, Volkswagen said, when the group plans to launch a new, unified battery cell that will be installed in 80% of its EVs by 2030.
“Our aim is to reduce battery cost and complexity while increasing range and performance,” said Thomas Schmall, Volkswagen Technology Board member and head of technology roadmap. “This will finally make e-mobility affordable and the dominant drive technology.”
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To support the widespread consumer acceptance of electric vehicles, Volkswagen plans to quintuple the European vehicle charging network by 2025. BP,
Volkswagen will build an additional 3,500 charging points in North America by the end of 2021 through its US subsidiary Electrify America, as well as 17,000 charging points in China by 2025 through a joint venture.
Automotive analyst Matthias Schmidt told MarketWatch that “giant” manufacturers like Volkswagen “are slowly waking up and starting to show that size matters when it comes to an electric future [that] regulation forces them into it. ”
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European car manufacturers are being pushed to produce more electric vehicles due to the threat of hundreds of millions of euros in fines from the European Union for binding fleet emissions targets.
The race to switch to electric mobility is also supported by the demand side, with many European governments offering thousands of dollars in tax breaks and subsidies to consumers to opt for electric vehicles.
“VW announces a major cost advantage by scaling up production and decides to integrate vertically to help reduce BEV costs on the way to price parity, which will be crucial once the subsidy scaffolding is slowly removed,” said Schmidt, who is also the publisher from European Electric Car. Report.