There have been significant movements in the electric vehicle (EV) space with the launch of Tesla’s Model Y and Volkswagen Group’s (VW) plans to increase its pure EV offering building 70 new models over the next decade.
What you may have missed in the deluge of news was that both Tesla and VW stressed the need for their own lithium ion battery megafactories to fuel this growth.
Volkswagen hint at own megafactory production
As suspected for some time by Benchmark Minerals, VW are now publicly warming to the idea of their own captive lithium ion battery supply.
The sheer scale and speed of its pure EV plans – vehicles that are 100% battery powered – means it is likely battery producers will not be able to keep pace with the world’s leading auto producer.
Another critical point is that VW will need tier one lithium ion battery suppliers. The auto industry has struggled to secure the necessary volumes of tier one cells from the highest quality production needed for the unforgiving demands of an electric vehicle.
VW have pivoted further towards electrification with plans to increase their range of electric vehicle models and to produce over 22 million EVs, up from their previous target of 15 million, in the next 10 years.
The company will be investing €30 billion in the years up to 2023 as part of their electrification shift.
To meet a production target of 22m EVs will require significant battery cell production – we estimate approximately 1,500 GWh of battery cells.
VW’s CEO, Herbet Diess, addressed these issues, stating that “in order to support this electric campaign we have selected LG Chem, SK Innovation, CATL and Samsung as strategy battery cell suppliers.” To achieve their ambitious targets Volkswagen are looking up the supply chain to secure their lithium ion battery cell supplies.
Diess went on to say “as a key component in any electric car really, the battery is of major strategic importance to us. This is also why we’re now investing in the next generation of battery cells. To make battery technology a permanent key area of expertise at Volkswagen we have established a centre of excellence.”
Significantly, Diess added “with a view to the increasing demand we are also taking a close look at a possible participation in battery cell manufacturing facilities in Europe of our own.”
Tesla’s pioneering model for battery factories combined with auto production looks set to have a new adopter.
Tesla fast-tracks China Gigafactory
Tesla CEO, Elon Musk revealed that its new SUV, the Model Y, would be built in its Shanghai factory, although Tesla has yet to announce whether production would be in the Gigafactory or Fremont plant in the USA.
Tesla explained that its Gigafactory 3 in China will be operation by the year’s end. However, Benchmark Minerals does not expect lithium ion battery production onsite for another 18 months to two years and Tesla is still seeking a battery partner for the facility.
Benchmark Minerals expects the Model Y to follow the same build blueprint as the Model 3 with its 2170 lithium ion cells, battery pack, chasis, and motor all being constructed at the Gigafactory in Nevada while the remainding body work and additional parts will be added in Fremont.
Musk said that megafactory being built in China “will be the equivalent of our Fremont car factory plus our Nevada Gigafactory combined.”
The Tesla Model Y will be priced at $39,000 with a range of 230 miles for the standard vehicle and $47,000 with 300 miles for the longer-range vehicle. Benchmark Minerals estimates the battery packs to have capacities of between 65-80kWh.
To illustrate the sheer size of the Gigafactory Musk explained that when complete it will be three to four times the size of the Pentagon.
We expect the combination of battery cell and electric vehicle production in one facility to be a common format going forward.