VW doubles down on electric investments

17 June 2020

16 June 2020

Volkswagen Group (VW) is increasing its investment in electric-vehicle (EV) technology. The manufacturing group is channelling up to an additional $200 million (€177 million) into American battery specialist QuantumScape.

VW also recently announced it is increasing its stake in e-mobility joint venture JAC Volkswagen (JAC), from 50% to 75%. Around €1 billion looks to be invested, which will include the acquisition of 50% of JAG, JAC’s parent company.

Solid-state batteries

By both increasing its stake in QuantumScape and investing the additional funds in the company, VW hopes to drive forward the development of solid-state batteries (SSB). VW considers this to be a promising technology for the ‘next-but-one generation of e-mobility’. With the same size of a current battery pack, SSBs could allow electrical ranges to reach the level of conventional drivetrains, with a significantly reduced charging time.

‘Volkswagen is taking e-mobility to the mainstream. A strong position in the field of batteries is a decisive factor in this regard,’ said Frank Blome, head of battery cell business at VW components. ‘We are securing our global supply base with efficient producers, gradually building up manufacturing capacities and driving the development of cutting-edge solid-state battery technology. Our focus in this context is on long-term strategic partnerships.’

Collaborating with QuantumScape since 2012, VW previously invested over $100 million in the company - making it the group’s the largest automotive shareholder. The two partners formed a joint venture in 2018, aiming to enable industrial-level production of solid-state batteries. Plans to set up a pilot plant look to be firmed up over the course of this year.

‘We are making technological progress with our partner QuantumScape,’ said Thomas Schmall, chairman of the board of management of VW Components. ‘The additional investment will effectively strengthen and accelerate our joint development work.’

Chinese electrification

VW is also increasing its share in JAC and acquiring 50% of JAG as part of a €1 billion investment. A further €1 billion will go towards a 26% stake in battery manufacturer Gotion High-Tech, making it the company’s largest shareholder. VW hopes this €2 billion play in China will help it to pave the way for greater model electrification and infrastructure investment.

‘Together with strong and reliable partners, Volkswagen is strengthening its electrification strategy in China,’ said VW CEO Herbert Diess. ‘The electric cars segment is growing rapidly and offers a great deal of potential for JAC Volkswagen. We are actively driving forward the development of battery cells in China through our strategic investment in Gotion.’

This large investment makes sense, as VW identifies China as the world’s biggest market for e-mobility. The German manufacturer plans to deliver around 1.5 million new energy vehicles (NEVs) across the country by 2025. JAC alone is expected to expand its portfolio with five additional battery-electric vehicle models by 2025, as well as build an e-model factory and complete a research and development centre in Hefei.

‘These investments shape the character of Volkswagen in China, making it a more localized, more sustainability-focused mobility company,’ said Stephan Wöllenstein, CEO of Volkswagen Group China. ‘By opening up the market, China is giving Volkswagen new business opportunities.’

As with VW’s investment in the upcoming ID series and other e-mobility projects, it is clear that the amount of time, money and effort the carmaker is dedicating to its electrification strategy, there can be no turning back now.