Automakers Struggling To Find Enough Batteries for Growing EV Demand

Some automakers are facing the dilemma of finding enough lithium-ion batteries for meeting their large-scale electric vehicle production targets.

According to a Automotive News, Volkswagen Group is one grappling with the question head-on as it readies for its aggressive target of manufacturing two-to-three million EVs per year by 2025. Several competitor global automakers are facing the same dilemma.

VW is reviewing bids from six battery cell suppliers for batteries going into its upcoming MEB electric platform.

“The capacity is not there,” said Thomas Sedran, VW’s head of group strategy, in December, referring to the suppliers. “Nobody has the capacity.”

Daimler, BMW, General Motors, and Ford have plans in place to spike up EV production in the next few years. Nissan in Europe predicts 20 percent of its sales will be EVs, and Tesla Motors has made the bold statement it will reach one million EV sales globally by 2020. Seeing more than 400,000 pre-orders for the Tesla Model 3 last year, and the second-generation Renault Zoe and all-new Chevy Bolt come to market with longer range, helped open up automakers’ product plans with more aggressive EV targets.

Declining battery costs also helps, which is getting more competitive as energy density rises. That may be getting much better soon.

Financial analysts at Exane BNP Paribas published a bullish report on EVs in late 2016. They expect battery pack prices to drop by nearly half, down to $215 per kWh by 2020 from $400 per kWh now. The report also sees the price dipping to as low as $140 per kWh in 2025.

Automakers are mulling over the prospect of following Tesla’s lead and setting up their own battery production plants. They have been impressed over Tesla building its large-scale batter plant in Sparks, Nev., and its plan to open a second factory in Europe.

It is a very tough choice.

“Quite frankly, if we compare ourselves today with Samsung and LG, they are light-years ahead of us,” Sedran said.

He estimated the capital expenditure needed to supply all of VW Group’s EVs with in-house batteries at about $21 billion.

“We need to check whether [the six suppliers tendering for the cell contract] have the financial means to build the capacity,” he said.

Sedran wouldn’t say whether the contract would be awarded to a single supplier or more than one.

Nissan is taking the rare position of producing sizable quantities of lithium ion cells at three plants. The automaker’s alliance partners, Renault and Daimler, don’t agree with Nissan’s strategy.

“We are a carmaker, not a chemist,” said Marianne Bataillon, Renault EV project leader.

Daimler CEO Dieter Zetsche shared a similar view with Automotive News Europe when asked whether the automaker would restart production of its own cells if the price per kilowatt-hours fell sharply enough.

“Politicians and unions are asking us to do that, but it would not make sense. … Today, the cell is almost a commodity good, so the cost is going down fast,” he said.

Daimler stopped producing its own cells a year ago when it shut down its Li-Tec unit in Germany, citing costs.

SEE ALSO:  Sony Will Finally Make Electric Vehicle Batteries

Battery suppliers will need to locate close to their customers’ factories, VW’s Sedran said. Transporting the cells over long distances is costly and risky, he said.

Proximity to a market with strong battery demand led two Asian battery makers to seek out locations in Europe. LG Chem is building a plant in Wroclaw, Poland, with production set to start in the second half of 2017. Korean rival Samsung SDI is building a plant in Hungary scheduled to be ready for production in 2018.

One option VW is exploring is building its own cells and switching over to solid-state battery technology. VW and other automakers have been interested in solid-state batteries; they’re expected to provide 40 percent more energy density than the best lithium-ion solutions due by the end of this decade, Sedran said.

VW is taking solid-state batteries seriously. The German automaker has a stake in solid-state supplier QuantumScape in California’s Silicon Valley. Sedran said the technology will be powering VW EVs as soon as 2022.

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