Volkswagen and Bosch set up JV to push European battery production

Volkswagen and Bosch have signed a memorandum of understanding to explore a joint venture dedicated to providing Europe with battery equipment solutions. The two companies aim to supply integrated battery production systems and on-site ramp-up and maintenance support for battery cell and system manufacturers, Volkswagen said.

The JV is expected to help VW reach its goal to build six cell factories by 2030, but it will also be available to serve other factories across Europe. The companies did not share how much they would invest in the venture.

As automakers set ever more ambitious targets to deliver millions of electric vehicles in the next few years, they’re working on becoming more self-sustaining and less reliant on getting their battery supplies from abroad, which has become even more problematic with pandemic-related supply chain issues. 2021 saw a string of battery joint ventures between automakers and cell suppliers keen to build battery cell production facilities close to home, but VW was already there with a 2019 JV with Northvolt and its first planned production facility in Saltzgitter, Germany.

“Europe has the unique chance to become a global battery powerhouse in the years to come,” said Thomas Schmall, a VW board member responsible for the automaker’s battery plans, in a statement. “There is a strong and growing demand for all aspects of battery production, including the equipment of new gigafactories. Volkswagen and Bosch will explore opportunities to develop and shape this novel, multibillion-euro industry in Europe.”

Volkswagen is also joining the growing trend of automakers finding ways to diversify revenues by offering services to competitors. On Tuesday, Ford and ADT formed a JV to provide a vehicle monitoring system that can be attached to any car make or model to help prevent thefts.

“Our decision to actively engage in the vertical integration of the battery-making value chain will tap considerable new profit pools,” added Schmall. “Setting out to establish a fully localized European supply chain for e-mobility made in Europe certainly marks a rare opportunity in business history.”

The European Battery Alliance has said a third of global batteries need to be produced in Europe by the end of the decade to cut dependence on South Korean and Chinese market dominants, but so far battery cell plants capable of generating under 900 gigawatt hours of capacity in Europe are set to make up only 16% of global production by 2029.

Tesla is planning to build a battery plant in Berlin with a capacity of 50 GWh next to its 300-hectare site to build Model Y vehicles, but both the plant and factory are still awaiting approval from regional authorities to begin production, despite CEO Elon Musk’s earlier promises that production would begin in November or December last year.

Volkswagen’s planned factory in Salzgitter is expected to produce 40 GWh, but if the automaker succeeds in ramping up production and building a total of six factories, it should have a combined output of 240 GWh.