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July 9, 2019

VW to deepen alliances with battery suppliers – report

Volkswagen Group is planning a strategic push to deepen alliances with battery suppliers - including lithium-ion cell producers - to back its push into e-mobility, according to Reuters.

By Sam Duke

Volkswagen Group is planning a strategic push to deepen alliances with battery suppliers – including lithium-ion cell producers – to back its push into e-mobility, according to Reuters.

VW Group board member Stefan Sommer told Reuters that the company is battling scepticism in the supply chain. "Not every supplier is convinced that electric mobility will come on such a large scale," Sommer told Reuters.

Within the framework of 'Roadmap E', the Volkswagen Group brands plan to bring 50 new full- electric models onto the roads by 2025. VW says the group needs battery capacity in excess of 150 GWh per year through 2025 just to equip its own electric fleet. That corresponds to an annual capacity of at least four "Gigafactories" for battery cells.

The Volkswagen Group has taken LG Chem, Samsung and SKI on board as strategic partners for Europe. These partners will safeguard battery supplies from 2019, it has said. In addition, SKI will cover the group's demand on the North American market from 2022. CATL was nominated as the strategic partner for China, and will supply batteries for the group's own electric fleet from 2019.

"These producers need to prioritise between making a new smartphone or building a new battery factory. So even the battery cell producers are asking: will production volumes scale up quickly?" Sommer told Reuters.

Sommer also suggested that joint ventures could be the way to go. "We have built up our own expertise, which we share with suppliers, which helps when we build a new plant. It gives us an early indication if there are teething problems," Sommer said.

"We have not been able to build as many cars as we wanted to. Our supplier is not delivering the numbers that we need," he told Reuters.

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