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BERLIN – When it comes to electric vehicles, the German Goliath follows the playbook of the American David.
Volkswagen this week announced a major expansion of its electric car plans with multi-million-euro moves on battery cell production and software development aimed at cutting off Tesla by replicating the pre- his invention.
“Our goal is to secure the pole position,” VW CEO Herbert Diess said of his electromobility plan on Power Day on Monday – an event marketed and produced to launch a Tesla or Apple product.
But unlike “Technoking” figure Elon Musk, Diess hit a more conservative figure, handing the broadcast to operators from Porsche and Audi brands to explain why battery technology is so essential to the company’s future. Despite Teutonic’s dry delivery, Diess’s message is as gung-ho as California’s premier.
Power Day was pulled together in just two weeks to curb investor frustration over Wolfsburg’s lack of clear guidance on its battery strategy, after Tesla unveiled its latest Battery Day event held at the end of last year, said a VW official who asked not to be named.
Under the plan, VW aims to have an interest in six battery centers in Europe by 2030 at a cost of around $ 29 billion, according to estimates by BloombergNEF. Meanwhile, Diess said 60 percent of the company’s vehicle sales should be electric by the end of the decade. There will also be a shift of internal resources to the development of software for autonomous vehicles.
Just like its competitor, that means fast turnaround and a huge investment.
“It’s a mirror image of what Tesla has done, and it works,” said Matthias Schmidt, a Berlin-based automated analyst, announcing a rise in the price of VW’s shares – up more than 17 percent. last week and close to previously seen heights of the 2015 Dieselgate emissions scandal. “It’s a carbon copy strategy, and the whole point is to try to get investors to pay for the electricity switchover. ”
Since taking over VW’s main job in 2018, Diess has been trying to clean up the lies about brand legality and damage caused by Dieselgate, pushing the electrification agenda.
Diess is well aware of his target: The two CEOs exchange emails regularly. They shared a stage in Berlin when Musk announced plans for a German gigafactory in late 2019, followed by a major PR coup last September when Diess made a shower with a video of himself driving Musk on board an airport near Volkswagen headquarters to a soundtrack spy movie.
“I think for a car that isn’t fun it’s good,” Musk told Diess of the VW ID.3 electric which has grown into a well-known e-model for the company.
For VW management, Tesla ‘s success has led to the company’ s own move despite some operators being unsure about a costly and confusing move away from fossil fuels.
“We will always see Tesla as the accelerator for our revolution,” a VW official said.
Gigafactories
The battle between upstart Tesla and 83-year-old German giant Diess is set just outside Berlin, where Tesla is building a car hub capable of delivering 500,000 electric vehicles each year. Musk has also said that the site will have the largest battery factory in the world.
Tesla is the most valuable car company in the world, with a market value of $ 676 billion compared to $ 120 billion VW, but it is a distinct player in global automotive sales. VW typically sells more than 10 million vehicles a year, 20 times Tesla’s production last year.
But Tesla is growing fast. The new facility in Berlin, along with a factory in China, poses the challenge to VW. Musk is also urging Tesla to develop a cheaper model aimed at the German market.
Diess also wants to use part of the EU’s distributed recovery fund to help cover the € 2.4 billion cost of building a battery plant in Spain and a factory move run by its Seat unit to power electric cars. -mach.
“Tesla has received billions of euros for its battery facility near Berlin,” Diess said Tuesday. “We need the same conditions that our competitors enjoy.”
Ben Kallo, an analyst with Baird’s financial adviser, believes the product would see at least two electric vehicle ecosystems – one controlled by Tesla with most of its technology in-house, similar to Apple’s iPhone – and competitive similar to Samsung that uses Android.
Tesla’s case is built on advanced batteries and advanced autonomous drive technology – both where VW is aiming for a challenge.
“There is only one complex software area where Europe still has the opportunity to play a key role: the next generation of automated software,” Diess said Tuesday.
If the company can get revenue stream from in-vehicle software, they can use that profit to cut the cost of their electric cars, making e-mobility more affordable.
“They’re basically trying to use their scale to reduce their costs, and the gap they need to build is on software,” Schmidt said. “Software is key to reducing the price of electric cars, and has the potential to change the overall business model. “
In terms of batteries, as in the overall strategy, the two companies are now in parallel rows.
Last year, Tesla outlined plans to reduce battery cell charges by 56 percent through an efficiency driver and a series of technical upgrades. Volkswagen said Monday it can reduce its cell costs by 50 percent by developing a one-size-fits-all format for most use cases.
“[They] the two have chosen one cell format they want to mass-produce to help push costs down, “said James Frith, head of energy storage at BloombergNEF.” It’s hard to say whether one of them is becoming more aggressive than the other. “
Better batteries
The punch for both sides could be a disappointment in solid state batteries, which have a higher energy density than the lithium-ion technology in use today. VW has invested in QuantumScape – an American company working on advances in cellular technology.
The benefits of such batteries could be profound. For example, charging times could be less than half compared to the best batteries today, and lighter materials could increase the vehicle range by 30 percent, VW says.
Sometime after 2025, the German manufacturer said it aims to cut ultra-fast charging time in its batteries for a 450-kilometer journey – the distance between Munich and Leipzig, or Las Vegas and Los Angeles – down to 12 minutes using the technology, less than half the maximum charging time today.
The problem is getting the prototypes to commercial development.
“It’s not true that we can say now at a time when solid state batteries will be depleted,” Diess said. “In lab tests they work well, but we lack a business concept and solution.”
That sentiment is reflected in what Musk told German politicians late last year at an event on battery technology organized by the country’s economy ministry.
“There’s a little more work involved in building the machine that will build the machine,” Musk said of the difficulties in delivering battery developments at an industry level. “The very difficult part then is to increase that yield. ”
That makes it difficult to predict a champion in the race to take control of the electric car field.
“The winner is likely to be decided based on its cathode material manufacturers and manufacturing costs,” Frith said.
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