Automakers Keen to Secure Battery Supply
An undersupply of electric vehicle (EV) batteries is occurring as more and more automakers are entering the EV market. The carmakers are trying to secure the largest possible number of EV batteries so that their production plans are not affected whereas EV battery manufacturers have already reached their full production capacities. The latter’s profits are expected to show a significant increase if this continues. Their profits have been close to zero for years due to price dumping and raw material price increases.
Volkswagen is currently changing its EV battery purchase plan out of concerns over its contract with Samsung SDI. At present, Volkswagen is considering adjusting its purchase from Samsung SDI from 20 GWh to 5 GWh or less. This is said to be because Samsung SDI failed to meet Volkswagen’s demand.
The German automaker has signed EV battery purchase contracts with multiple companies such as LG Chem, SK Innovation and CATL. The total value of the contracts amounts to 50 billion euros. Meanwhile, Tesla is working with Panasonic and BYD is concentrating on supply to its own EVs.
Volkswagen is planning to set up EV battery manufacturing facilities in Germany with Northvolt, a Swedish manufacturer, by investing one billion euros. The plan is likely to face challenges though. “Automakers are different in nature from chemical companies and, as such, it will be rather difficult for Volkswagen to produce EV batteries on its own,” SK Innovation said, adding, “Besides, Germany is a country that unsuccessfully tried once to grow its own battery industry.”