Volkswagen and Bosch JV to Boost European Battery Production

Volkswagen and Bosch Collaborate on Battery Equipment Solutions

A memorandum of understanding has been established between Volkswagen and Bosch to investigate the formation of a joint venture. This venture will focus on delivering battery equipment solutions throughout Europe.

The primary objective is to provide comprehensive battery production systems, alongside on-site support for the initial scaling and ongoing maintenance of battery cell and system manufacturers, as stated by Volkswagen.

Supporting Volkswagen’s Expansion and Beyond

This joint venture is anticipated to significantly contribute to Volkswagen’s ambition of constructing six cell factories by 2030. However, its services will extend beyond Volkswagen, being accessible to other manufacturing facilities across the European continent.

The financial investment details for this venture have not yet been disclosed by either company.

The Drive for Self-Sufficiency in Battery Production

Automakers are increasingly setting ambitious goals for the delivery of electric vehicles in the coming years. Consequently, they are prioritizing greater self-reliance and reducing their dependence on foreign battery suppliers.

Supply chain disruptions, exacerbated by the pandemic, have underscored the importance of localized battery production. The year 2021 witnessed a surge in joint ventures between automakers and cell suppliers, all aiming to establish battery cell production facilities closer to their markets.

Volkswagen had already taken steps in this direction with a 2019 joint venture alongside Northvolt, with their initial production facility planned for Saltzgitter, Germany.

Europe’s Potential as a Battery Hub

Thomas Schmall, a member of the VW board overseeing battery initiatives, emphasized Europe’s potential. He stated, “Europe has the unique chance to become a global battery powerhouse in the years to come.”

Schmall continued, noting a robust and expanding demand for all facets of battery production, including the equipment necessary for new gigafactories. He believes Volkswagen and Bosch are positioned to capitalize on and shape this emerging multibillion-euro industry within Europe.

Diversifying Revenue Streams

Volkswagen is also embracing a growing industry trend: diversifying revenue by offering services to competitors. A recent example is the joint venture between Ford and ADT, which provides a vehicle monitoring system compatible with all vehicle makes and models, designed to deter theft.

Schmall added, “Our decision to actively engage in the vertical integration of the battery-making value chain will tap considerable new profit pools.” He further highlighted the unique business opportunity presented by establishing a fully localized European supply chain for e-mobility.

European Battery Production Targets

The European Battery Alliance has set a target for Europe to produce a third of the world’s batteries by the end of the decade. This is crucial for reducing reliance on dominant players in South Korea and China.

However, current projections indicate that planned battery cell plants in Europe, with a combined capacity of under 900 gigawatt hours, will only account for 16% of global production by 2029.

Tesla’s Berlin Plant and Production Delays

Tesla is planning a 50 GWh battery plant in Berlin, adjacent to its 300-hectare Model Y vehicle production site. Despite initial projections from CEO Elon Musk for production to begin in late 2021, both the battery plant and the vehicle factory are still awaiting approval from regional authorities.

Volkswagen’s Production Capacity

Volkswagen’s Salzgitter factory is projected to yield 40 GWh of battery capacity. Successful scaling and the completion of all six planned factories would result in a combined output of 240 GWh.