Own battery cell production stupid idea, automakers say

Let someone else do it

Let someone else do it

There is a highly interesting article in Germany’s Welt. It is required reading for all interested in EVs. It especially is of interest for people interested or invested in Tesla, from Elon Musk on down. Reading it will make some people doubt the sanity of the Gigafactory. The story is in German, and in case the language doesn’t come easy to you, here is an abstract.

Germany’s Volkswagen has been trying to talk other automakers into jointly starting large-scale battery cell production, to supply the coming boom of EVs. The answer by Volkswagen’s German peers was a resounding Nein. Making battery cells equals losing money, they say.

  • “Battery cells are parts better bought from suppliers,” says BMW. BMW is proud of its low vertical integration. Only 25 to 30 percent of their parts are made at BMW.
  • “We buy our battery cells from LG,” says a spokesperson of Opel’s GM.
  • Ford likewise said no to a battery cell co-op: “We focus on assembling complete batteries,” a Ford spokesman said. Ford doesn’t want to get involved with battery cells.
  • Daimler did get involved. It built cells in Daimler’s factory in Gaggenau. Daimler shut down battery cell production last year, because it was a money-loser.

There is a huge overcapacity in global battery cell production, putting pressure on prices. It is much cheaper for automakers to buy their battery cells in South Korea than to invest into their own production. Even a larger scale joint production in Germany would result in higher unit costs than bringing the cells in from Asia, automakers argue.

The joint battery cell production was an idea of union representatives fearing that jobs will be lost when people switch from gassers to simpler-to-make EVs. Volkswagen is in the hands of the unions, and it is in trouble.