April 26, 2021
“Our transformation will be fast, unprecedented, and bigger than anything the industry has seen in the past century”, announced Herbert Diess, CEO of Volkswagen at its Power Day event on 15 March during which the group presented the latest news in the shift to e-mobility. More than just a development challenge, this transition is the dawning of a new industrial era, and Volkswagen has every intention of being part of it.
Four short years ago, who would have thought that the world’s leading manufacturer of fuel and diesel vehicles would hold a global event not about cars, but about power?
It’s as if Kodak decided to have a “digital day”, or the world’s biggest hotel group announced that the future is in privately-rented apartments.
It’s unconceivable! And yet, like a startup, Volkswagen has pivoted, organising its first Power Day focused on its electrification and electric power management systems. From battery design, manufacture, recycling and the challenges of charging, the German group is making the dream of electric mobility a reality. Six years after “Dieselgate” (still being investigated in some countries), it launched the I.D. series, effectively turning the page. And with its more recent announcements, Volkswagen is embarking on an entirely new volume in its history.
There’s been no shortage of announcements. The battery now a key element, Volkswagen is looking to standardise the format of its cells for 80% of its future electric cars, effectively halving the current cost of the batteries. To deliver on this promise and support sales growth as demand for batteries in Europe gains traction, Volkswagen has announced plans for no less than SIX gigafactories — i.e., an annual production capacity of 240 GWh — to meet 80% of its needs by 2030.
The first will be in Skellefteå, Sweden, expected in 2023, in association with Northvolt with which it has placed an order for 14 billion cells. The second will be in Salzgitter, Germany, expected in 2025. The western European gigafactory, expected in 2026, will be located either in Portugal, France or Spain. The location and the date of the three remaining gigafactories are unknown at this point. What we do know is that the eastern European factory, pencilled in for 2027, will be in the Czech Republic, Poland or Slovakia.
Then there’s the all-important question of charging: a real game-changer in the EV world. Extending the network of charging points is a priority for Volkswagen. It also wants to enhance fast-charge capabilities (25 minutes for 450 kilometres, down to 17 minutes by 2025, and 12 minutes thereafter). So while you probably won’t have enough time to down your coffee, you’ll still pull out of the service station without the smell of a petrol or diesel pump. The German group plans to roll out some 18,000 European charging points by 2025, and its partners are on standby to execute this plan.
Starting with Scania for the batteries of future electric trucks, followed by its joint venture CAMS (Charging As a Mobile Service) with FAW, Star Charge and JAC in China, to build out its charging infrastructure. The German manufacturer will have a similar arrangement on the other side of the Atlantic with Electrify America whose CEO, Giovanni Palazzo, has announced 800 charging stations for this year — that’s right, charging stations — in both the US and Canada. Partners in the European markets include: Ionity (created in 2017 as a joint venture between no less than BMW, Daimler, Ford and Porsche), and EnelX in Italy with the group VW-Audi, set to start operating in Spain. Volkswagen has also teamed up with BP to install 8,000 fast-charge points in Germany and the UK, and with Iberdrola in Spain. This impressive line-up of partnerships is solid evidence of Volkswagen’s ability to leverage its network.
Volkswagen has made it clear that it is a fully-fledged player in this industrial dynamic, with a massive scope for development. Demand for EV batteries is growing exponentially and in step with European standards (especially the Green Deal and targets to reduce CO2).
These regulations go hand-in-hand with two more factors: Total Cost of Ownership (TCO), and user experience, which is making itself heard. Volkswagen has clearly understood that batteries are central to the race, and are not just a strategic consideration. Besides aligning to the 2018 EU Battery Strategy and the targets of the EU Commission in general, Volkswagen’s industrial strategy is remarkable. Not only has it laid bare its determination to completely reinvent its brand, it has stepped up as the European leader in the transformation to e-mobility by identifying batteries as the core issue in order to tackle it at the source, while staying in control of the rest of its value chain, including charging — and not only in Europe.
It is a pity, however, that the word “people” — a key element of Volkswagen’s DNA and marketing — was pronounced only at the end (and once during the two-hour conference), and that ethical and gender diversity was not given more attention. The energy transition inherent to building gigafactories involves a societal transition that puts the spotlight on talents that have so far been lacking.
The key points here are that Europe urgently needs gigafactories, and it is by building partnerships that it was meet this need. This is Verkor’s very undertaking in France.
We can expect this surge in electric power to continue with Stellantis’ announcements at its Electrification Day on 8 July this year.