The German auto giant's board has approved plans to spend €44 billion over the next five years to overhaul its plants for electric vehicle production. DW explores where the money will be spent.
Image: picture-alliance/dpa/B. Roessler
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Volkswagen on Friday took a step closer to shaking off the Dieselgate emissions cheating scandal after its supervisory board gave its ambitious electromobility strategy the go-ahead.
Over the next two years, three of its German factories will be retrofitted for the production of electric vehicles (EVs) as the Wolfsburg-headquartered company aims to create the largest production network for EVs in Europe.
VW said on Friday its €44-billion ($50-billion) investment would include the overhaul of its production facilities for at least three sites to help achieve its target to launch 30 pure EVs over the next decade.
It aims to achieve annual unit sales of 2-3 million e-cars by 2025, accounting for up to 25 percent of its total sales.
The supervisory board also saw plans for VW's planned entry-level e-car, which reports suggest will cost just €20,000. Volkswagen's first fully-autonomous vehicles are expected to roll off the production lines by 2021, according to the firm's Together 2025 strategy presentation.
The company also plans to build its competence in battery cell production for EVs amid concerns that Germany is losing out to Asia.
VW plans to give the 9,000 employees at its factory in Emden in northwestern Germany the task of building its first sub-€20,000 electric model. Once the plant is overhauled, Emden could churn out 300,000 small and medium-sized EVs per year, the company estimates.
The Passat, which is currently produced in Emden, will be switched to the Skoda Kvasiny plant in the Czech Republic.
VW's largest plant in Zwickau, in eastern Germany, is already being kitted out for electric production. Volkswagen's first electric model to be based on its modular electric toolkit (MEB) will begin production by the end of 2019. Six electric models belonging to three in-house VW brands will be produced at Zwickau from 2021.
The Hanover factory, which employees some 16,000 workers, is slated to produce electric-Transporter vans from 2022. The site will also make around 100,000 ID Buzz vans per year, a 21st century version of the iconic Type 2 campervan. Other EVs are expected to be added, and the plant will maintain production of some combustion-engine vehicles.
Rumored to be a five-door compact crossover loosely based on the Polo, the lower-cost model will cost less than €20,000.
Known internally as "MEB Entry," the budget-conscious ID model will allow VW to compete with US rival Tesla, which also aims to give its Model 3 car a mass-market makeover.
The Model 3, which will be available in Germany from next year will cost €31,000. VW's electric equivalent won't be ready for a further four years, according to German media.
Battery cell production: Is Germany too late to the party?
Germany intends to spend €1 billion to support a consortium looking to produce electric battery cells. Meant to reduce the dependence of carmakers on Asian suppliers and protect jobs, the measure may come too late.
Image: picture-alliance/Imagechina/D. Changzheng
Northvolt's mammoth project
Headed by a former Tesla executive, Swedish company Northvolt aims to build Europe's biggest lithium-ion battery factory, producing 32 gigawatt-hours (GWh) of battery cells a year by 2023. The $4-billion project was granted a loan from the EU and will be built in cooperation with German industrial giant Siemens. Northvolt is carmaker BMW's preferred partner after production starts in 2020.
Image: Northvolt
Tesla head start Germany
US electric car pioneer Tesla, which sources its cells and batteries from its own Gigafactory, has plans to build three more such factories to accompany its first in the Nevada desert (pictured). CEO Elon Musk favors Germany as the location for its European factory. Its Germany-based Grohmann Automation division specializes in manufacturing systems for battery plants, giving Tesla a head start.
Image: picture alliance/dpa/Tesla
CATL thinking big in Thuringia
The chairman of Contemporary Amperex Technology (CATL), Robin Zeng, announced plans in July to build its first battery cell production site in the eastern German state of Thuringia. The factory in Erfurt will have a capacity of 14 GWh by 2022, with carmaker BMW to source €1.5 billion worth of cells from it. China's biggest battery maker plans to create 600 new jobs there in research and elsewhere.
Image: picture-alliance/dpa/P. Zinken
GSR Capital buys Nissan best-seller
Chinese investment firm GSR Capital last year bought Nissan Motor's battery business Automotive Energy Supply Corp (AESC), including battery plants in Japan, the US and Britain. AESC offers cells and modules, and its battery packs (pictured) power the world's best-selling electric car, the Nissan Leaf. Under GSR management, AESC will expand in the UK, hoping to win over more European carmakers.
Image: AESC
Priced Eastern locations
Countries in Eastern Europe appear to be favored by battery makers. Samsung SDI President Jun Young-hyun (left) and Hungarian PM Viktor Orban (center) in May opened a new battery plant in Göd. The Koreans don't make cells in Hungary, but others will. Japan's GS Yuasa in Miskolc, China's SK Innovations in Komarom (launch 2020) and LG Chem in Wroclaw, Poland (launch 2019 with a capacity of 4 Gwh).
Image: Samsung SDI
Carmakers outsourcing
German carmakers are shunning the risk of producing battery cells of their own, relying primarily on cells made in Asia, which some of them — like Daimler in Kamenz, eastern Germany — assemble into battery packs. The luxury carmaker will source cells for its entire EQ electric car model range, launching in 2020, from SK Innovations and LG Chem.
Image: picture alliance/dpa
Volkswagen mulls cell production
Germany's Volkswagen — the world's largest carmaker by sales — is still weighing options. One being cell production of its own at its plant in Salzgitter, Germany. Another alternative to be considered by an electric vehicle strategy meeting of the board on November 16 is an alliance with South Korean cell maker SK Innovation.
Image: picture-alliance/dpa/P. von Ditfurth
Sober-minded calculations
Meanwhile, Germany's biggest automotive supplier, Bosch, dropped plans to produce battery cells, saying the investment required would be too risky. "Given dynamic external market forces that can only be predicted with difficulty, it's unclear whether this investment would pay off," the firm said, after calculating it would have to invest €20 billion to secure a market share of 20 percent.
Image: picture-alliance/dpa/S. Kahnert
TerraE hung out to dry
German efforts to establish cell production suffered a new setback in October, when TerraE — a consortium of 20 companies — failed. None of the businesses named, including Varta Microbattery Systems, Ford and StreetScooter, eventually stepped foward to fund the project. Launched in 2017, the idea was to build two foundries for 34 Gwh capacity by 2028, rivaling Tesla's Gigafactory.
Image: picture-alliance/dpa/A. Burgi
Brussels powering ahead
Fearing the EU auto industry could be left behind in the race, the bloc's energy commissioner, Maros Sefcovic, has launched a "Battery Alliance," offering billions of euros to fund cell manufacturing and research. Germany's newest drive is part of it. Sefcovic believes car making in Europe will be impossible "if you don't master the skills, the innovation and the research linked to batteries."
Image: picture-alliance/abaca/ANDBZ/Monasse
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Tackling Asia's battery cell dominance
After the German government, this week, gave its backing for the domestic production of electric battery cells, Volkswagen has confirmed it is holding talks with South Korean battery manufacturer SKI Innovation for a possible joint-venture in Germany.
Although Germany has allowed Asian producers to take a lead in battery-cell production, auto industry insiders believe it is vital that home-grown manufacturing is ramped up.
VW, this week, signed a major deal with SKI to supply battery cells for the EV fleet, but the pair could also build new factories in Europe and North America.
What about workers?
Volkswagen says its workers have been guaranteed their jobs until 2028, but because electromobility has fewer production steps, a smaller staff would be required in the long term. The company said it planned to decrease the number of workers through a partial retirement scheme, and natural attrition.
One Million Electric Vehicles
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Where possible, temporary workers that are no longer required at Hanover, Emden or Zwickau will be offered contracts at plants belonging to VW's other brands.
