Volkswagen and Bosch staff as much as increase Europe’s battery ambitions By Reuters

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©Reuters. FILE PHOTO: A Volkswagen logo is seen as it unveils its ID.6 and ID.6 CROZZ SUV at a world premiere ahead of the Shanghai Auto Show in Shanghai, China, April 18, 2021. REUTERS/Aly Song/File Photo

By Victoria Waldersee

BERLIN (Reuters) – Volkswagen (DE:) and Bosch have agreed to set up a joint venture by the end of this year to equip battery cell factories and help make Europe self-sufficient in battery production.

The company will supply battery production systems and help battery cell makers scale and maintain production facilities, Volkswagen said on Tuesday, adding it would serve its own factories and others across Europe.

“Europe has a unique opportunity to become the global powerhouse for batteries in the coming years,” said Volkswagen board member Thomas Schmall, who is responsible for VW’s battery plans.

“We are working to build a complete, localized, European e-mobility supply chain ‘Made in Europe’.”

The companies did not say how much they would invest in the company.

So far, according to data from the European Battery Alliance (EBA), battery cell plants with a capacity of almost 900 gigawatt hours (GWh) have been announced in Europe, which are expected to account for around 16% of global production by 2029.

But the EBA has said that by 2030, a third of the world’s batteries should be produced in Europe to reduce reliance on dominant suppliers, mainly from South Korea and China.

The largest planned battery plant in Europe is that of Tesla (NASDAQ:), which is located in Berlin next to its electric vehicle factory and is expected to produce over 100 GWh of capacity at its peak.

Both the plant and the factory are still awaiting approval from the regional authorities to start production.

Volkswagen, which aims to surpass Tesla as the top seller of electric vehicles (EV), has announced plans to build six so-called gigafactories with a total capacity of 240 GWh in Europe by the end of the decade, in order to control as much of the supply chain as possible.

Volkswagen CEO Herbert Diess, who clashed with the company’s powerful works council late last year over its electrification strategy, said the battery division should and will generate sales of 20 billion euros ($22.7 billion) by the end of the decade also ready for a partial sale.

The automaker, which last December increased its spending on electrification to €52 billion over the next five years, has pledged to sell only electric vehicles in Europe by 2035.

For Bosch, the move will strengthen its role in the EV transition, which poses an existential threat to many vendors because building an EV requires fewer steps and less labor than building an internal combustion engine car.

In the past, the world’s largest supplier decided against investing in battery cell production itself because it considered the upfront investment too expensive.

German daily Handelsblatt reported in December that the two companies were also nearing an agreement to collaborate on automotive software, with Volkswagen planning to invest a three-digit million euro amount. The companies declined to comment.

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