Volkswagen to slash EV battery costs by 50 per cent

Volkswagen Group will open six new European battery-cell gigafactories by 2030 to meet demand for a wave of almost 30 battery-electric cars to be based on one platform alone by the end of next year, it was revealed at yesterday’s Power Day conference.

That would see the German auto giant release the equivalent of Tesla’s entire new model range every quarter for the next seven quarters.

The surge of cars will be based on the Volkswagen Group’s soon-to-be ubiquitous Modular Electric Matrix (MEB) EV platform.

Volkswagen holds long-term contracts for the supply of lithium, of which Australia is the world's largest producer, but became so fed up with being handbraked by its battery supply partners that it is now on track to become the world’s second-biggest cell-maker behind only China’s Contemporary Amperex Technologies Limited (CATL).

The move comes together with the announcement of a new battery-cell technology that will more than halve the cost of cells – by far the most expensive single technology in an EV – while lowering their weight as well, giving consumers more range for less money.

Called the Unified Premium Battery (UPP) cell, it will be used across all of the Volkswagen Group’s brands, which include Bentley, Audi, Bugatti, Lamborghini, Seat, Skoda, Porsche and, of course, Volkswagen, starting with Audi’s Artemis project in 2024.

The new dry-coating production technology (also favoured by Tesla) eliminates battery modules and pouches in favour of a 'cell2pack’ system to lower weight, cost and complexity for 80 per cent of the VW Group’s vehicles.

The Volkswagen Group is targeting a reduction of more than 50 per cent in premium vehicles, to below €100/kWh of capacity, though that figure will reduce to 30 per cent with volume models like the Volkswagen ID.3 hatchback.

Volkswagen has yet to confirm whether those savings will be passed on to consumers or used to pay for the €25 billion bet on battery-electric power as the fuel tank of the future.

Last week, Volkswagen Group CEO Dr Herbert Diess dismissed hydrogen fuel-cell electric vehicle (FCEV) technology, which is being developed by Toyota and Hyundai, as a viable powertrain alternative to EVs.

"You won’t see any hydrogen usage in cars," he told Financial Times.

"Not even in 10 years, because the physics behind it are so unreasonable. You can’t ramp the fuel-cell up and down like a combustion engine. So you need another 10kW battery, you need an electric engine, and you need to run the fuel-cell."

According to the report, Volkswagen Group, Mercedes-Benz, BMW and Stellantis (Fiat, Chrysler, Jeep, Alfa Romeo, Peugeot and Citroen) have joined General Motors in rejecting FCEV in favour of EVs.

Yesterday, Dr Diess (above) insisted the company would double its share of EVs to between six and eight per cent of the VW Group’s new vehicle sales this year.

He predicted that 70 per cent of Volkswagen brand models (and half of those from the group) would be EVs by 2030.

From 2022 some of the Volkswagen Group’s MEB EVs will adopt bi-directional charging. The technology will allow them to effectively double as domestic energy storage; charging from renewables or at off-peak times and releasing energy back into households, businesses or the electricity grid when needed.

The MEB architecture already sits beneath the Volkswagen-branded ID.3, ID.4 and ID.5, but will make its way to the Audi, Seat and Skoda brands as well as Ford of Europe’s first two standalone EVs.

Of the 27 planned MEB models by 2022, EVs from the Audi, Seat, Skoda and Volkswagen brands are already confirmed to take the figure up to 10, and there will be China-only models coming from both Volkswagen’s SAIC and BAIC joint-ventures.

The 27-model figure doesn’t take into account EVs from the group’s three other EV platforms, which include the Audi e-tron and e-tron Coupe’s C-BEV architecture, the J1 platform beneath the Porsche Taycan and the Audi e-tron GT, and the more futuristic PPE platform, which evolved from both of them.

Eventually, though, all of those architectures will disappear, with just one platform, dubbed the Scalable Systems Platform (SSP, which will be first seen in the Volkswagen Project Trinity), taking over volume, luxury and sports car work.

Volkswagen already has two of the six planned battery-cell factories that would help take Europe’s share of global cell supply up to around a third, based on current commitments.

It has set itself a target of 240 gigawatt-hours of annual production by 2030, with 40gWh coming from its Swedish partner Northvolt (founded by ex-Tesla executive Peter Carlsson), with which it just signed a $US14 billion supply contract.

"Together with partners, we want to have a total of six cell factories up and running in Europe by 2030, thus guaranteeing security of supply," said Volkswagen Group’s technology and procurement head Thomas Schmall.

While it has not confirmed plans for a charging network outside Europe (beyond the Electrify America system paid for, in large part, by its Dieselgate fines), VW has committed to delivering another 18,000 fast-chargers across Europe, in partnership with the UK’s BP, Italy’s Enel and Spain’s Iberdrola.

Volkswagen Group Australia’s first EV is expected to be the Volkswagen ID.4 (pictured here), but at this stage the mid-size SUV is not due to arrive here until 2023.