The race to take control of the electric vehicle industry may be tightening as Volkswagen, a German car giant and Tesla rival, unveiled plans Monday to reduce the cost of batteries and operate an extensive cost network.
In the first ever “Power Day,” in memory of electric car maker TSLA Tesla,
“Battery Day,” the hyped group, the German company that owns the Volkswagen, Audi and Porsche brands, said it would rely on six gigafactories in Europe to supply as the industry is in dire need.
Shares in Volkswagen VOW Group,
VWAGY,
VWAPY,
it rose about 3% on Monday as the company’s top executives outlined a roadmap for technology expansion.
Electric vehicles have become like Wolfsburg, Germany, “the company’s core business,” said Herbert Diess, chairman of the group’s management board, and his new plans come as the battleground to control the a fast-growing electric vehicle space.
Read also: Forget Nio and XPeng. This company and Tesla will be the top two electric vehicle plays by 2025, UBS said.
According to analysts at UBS, EVs could enter 100% of the car market by 2040. Over the next few years, Swiss banking projects will reveal Volkswagen and Tesla as market leaders, with the German company expected to catch up with Tesla on the volume of electric vehicles sold as early as next year.
Volkswagen lifted Tesla from its high position in the European EV market in 2020 and now has a 20% to 25% market share in this key segment. Europe is the second largest electric vehicle market in the world after China, which is home to domestic EV manufacturers including Nio NIO,
XPeng XPEV,
and BYD 1211,
As car companies scramble in the global pivot to switch to electricity, UBS said it expects “regional tension this year and global shortages by 2025.” the supply of battery cells will dwindle. ‘needed to feed demand. ”
To get the batteries needed for expansion, Volskwagen said it will be responsible for 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 Northvolt Partner.
Read more: Northvolt backed by Volkswagen and Goldman Sachs carve up Cuberg Silicon Valley as electric vehicle battery race heats up
Northvolt said Monday it has received a $ 14 billion order from Volkswagen for core battery cells. The German group increased its ownership interest in the Swedish company, which was founded by a former Tesla employee with backers including Goldman Sachs GS,
and Spotify SPOT,
CEO Daniel Ek.
In addition, Volkswagen said it will seek to reduce the cost of its batteries – the key feature in reducing the total cost of vehicles – by up to 50% over the next decade.
Cost savings will be seen in some form from 2023 onwards, Volkswagen said, when the group plans to launch a new integrated battery cell that will be installed in 80% of its EVs by 2030.
“We aim to reduce the cost and complexity of the battery while at the same time increasing its range and performance,” said Thomas Schmall, a member of Volkswagen’s technology board and head of its technology roadmap. “This will make e-travel affordable and the most powerful driving technology.”
Plus: Buy these 3 battery stocks to play the electric party, but stay away from this company, says UBS
To support the widespread adoption of electric vehicles, Volkswagen plans to triple Europe’s vehicle tax network by 2025. Within the next few years, the company is aims to operate 18,000 public fast-charge points, including 8,000 in partnership with BP oil giant BP,
Volkswagen will raise another 3,500 cost points in North America by the end of 2021 through its U.S. subsidiary, Electrify America, as well as 17,000 cost points in China by 2025 through a joint venture.
Automated Analyzer Matthias Schmidt MarketWatch said “big” manufacturers like Volkswagen are “slowly waking up and starting to show that size is important when it comes to the future of electricity [that] regulation introduces them. ”
More: Tesla is in decline, SUVs are king, and more insights from this major electric vehicle market
European carmakers are being pushed to make more electric vehicles with the threat of hundreds of millions of euros in fines from the European Union over binding fleet emissions targets.
The race to move towards electric shifting is also supported by the demand side, with many European governments offering thousands of dollars in tax breaks and subsidies to consumers to choose electric vehicles.
“VW cites a major cost benefit from scaling production, deciding to integrate directly into helping cut BEV costs on the road to price parity, once vital. that subsidy scaffolding is being slowly removed, ”said Schmidt, who is also the publisher of the European Electric Car Report.