Tesla faces a race with Volkswagen as the German car giant targets battery costs and new gigafactories

The race to dominate the electric vehicle industry may get tighter as Volkswagen, the German car giant and Tesla’s looming rival, unveiled plans Monday to lower the cost of batteries and operate an extensive charging network.

On its first “Power Day,” reminiscent of electric car maker Tesla’s TSLA,
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On the highly publicized “Battery Day,” the German group that owns the Volkswagen, Audi and Porsche brands, said it would rely on six gigafactories in Europe to secure supplies as the industry faces looming shortages.

Shares in Volkswagen Group VOW,
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it rose about 3% on Monday when 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, chairman of the group’s board of directors, and his new plans emerge as the battle to dominate the fast-growing electric vehicle space intensifies.

Read also: Forget Nio and XPeng. This company and Tesla will be the top two electric vehicles by 2025, says UBS.

According to analysts at UBS, electric vehicles could achieve 100% penetration in the automotive market by 2040. In the coming years, the Swiss bank projects that Volkswagen and Tesla will emerge as market leaders, and the German company is expected to reach Tesla. in terms of total volume of electric vehicles sold next year.

Volkswagen pushed Tesla out of its highest rank in the European EV market in 2020 and now has a 20-25% market share in this key region. Europe is the second largest electric vehicle market in the world after China, which is home to domestic electric vehicle manufacturers, including Nio NIO.
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and BYD 1211,

As auto companies rush into a sector shift toward electric mobility, UBS said it expects the supply of battery cells needed to power demand will face “regional tightness this year and global shortages by 2025.”

To secure the batteries necessary for the expansion, Volkswagen said it will rely on six gigafactories by 2030. The first factories will be in the Swedish cities of Salzgitter and Skellefteå, where Volkswagen is building a factory with its partner Northvolt.

Read more: Northvolt, backed by Volkswagen and Goldman Sachs, acquires Silicon Valley’s Cuberg as electric vehicle battery race intensifies

Northvolt said Monday it had received an order from Volkswagen for $ 14 billion for premium battery cells. The German group also increased its stake in ownership of the Swedish company, founded by a former Tesla employee with sponsors such as Goldman Sachs GS,
and Spotify SPOT,
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Executive Director Daniel Ek.

In addition, Volkswagen said it will seek to reduce the cost of its batteries, the key factor in reducing the total cost of vehicles, by up to 50% over the next decade.

The cost savings will somehow be seen from 2023 onwards, Volkswagen said, when the group plans to launch a new unified battery cell that will be installed in 80% of its electric vehicles by 2030.

“Our goal is to reduce the cost and complexity of the battery while increasing its range and performance,” said Thomas Schmall, member of Volkswagen’s technology board and director of its technology roadmap. “This will ultimately make electric mobility affordable and the dominant drive technology.”

Plus: Buy These 3 Stocks Of Batteries To Play The Electric Vehicle Party, But Stay Away From This Company, Says UBS

To support the widespread adoption of electric vehicles by consumers, Volkswagen plans to multiply the European vehicle charging network by five by 2025. In the coming years, the company aims to operate 18,000 public fast-charging points, including 8,000 in association with the oil company BP. BP,

Volkswagen will build another 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 beginning to show that size matters when it comes to an electric future. [that] regulation is forcing them to do so. ”

Plus: Tesla is on the decline, SUVs are king, and more on this key EV market

European automakers are being pushed to make more electric vehicles by the threat of hundreds of millions of euros in fines from the European Union for binding fleet emissions targets.

The race for the transition to electric mobility is also supported on the demand side, with many European governments offering thousands of dollars in tax breaks and subsidies for consumers to choose electric vehicles.

“VW announces a huge cost advantage by increasing production, deciding to vertically integrate to help reduce BEV costs on the way to price parity, something critical once the subsidy scaffold is slowly removed,” said Schmidt, who is also the editor of European Electric Car. Report.


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