Tesla & Volkswagen — A European Battery Factory Race (Video)

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The “EV Stock Channel” has published a video titled “European battery factory race (VW & Tesla).” It took a dive into how both companies are establishing electric vehicle battery factories and what it means for Europe. Tesla will manufacture its new 4680 battery cells at Gigafactory in Berlin with the goal of getting to around 100 gigawatt-hours of capacity initially and later on expanding to 200–250 gigawatt-hours. As for the timing, the video’s host, Ivan, pointed out that Elon shared a clue in Tesla’s latest conference call, the company’s Q1 2021 earnings call.

“We have a small sort of pilot plant, which is still big by normal standards. It’s expected to have like a 10-gigawatt hour per year capability in Fremont, California. And we made quite a few cells. We’re not quite yet at the point where we think the cells are reliable enough to be shipped in cars, but we’re getting close to that point.

“And then we’ve already ordered most of the equipment for battery production in Berlin and then much of it for Austin as well. … Overall, I think we still feel quite optimistic about this achieving volume production of the 4680 next year,” Elon Musk said during the call.

The video noted that based on Elon’s comments, it looked like Tesla will still need a year to fine tune its 4680 battery cell manufacturing processes. This includes getting the equipment installed and testing it. If everything comes along as planned, we could see 80 to 90 gigawatt-hours sometime in late 2022.

“The only other question is, will Tesla build a second Gigafactory in Europe as has been news reports relating to Tesla having interests in building a future Gigafactory in the UK,” Ivan said.

Enter Volkswagen

Next, Ivan spoke about Volkswagen and his thoughts on its plans to use synthetic graphite. He noted that Volkswagen had its Power Day event a few weeks ago. “Some things that I thought were interesting were Volkswagen really didn’t outline where they were going to source their battery raw materials from, and second, they discussed using synthetic graphite anodes. To me, this was a bit of a surprise considering that the current supply of synthetic graphite comes from China, which has a very high CO2 footprint.”

Volkswagen’s Plans For Battery Cell Production In Europe

Volkswagen’s CEO, Herbert Diess, spoke about this during Volkswagen Power Day, and Ivan’s video included a short clip. In the clip, Diess said, “For us, this means an additional demand of about 240 gigawatt-hours in Europe. That’s why we are taking action. We are planning to operate up to 6 gigafactories with 40-gigawatt hours each across Europe on our own and in collaboration with partners.”

Ivan wanted to know where and when these 40 gigawatt-hour factories would be built. He noted that the first gigafactory to reach 40 gigawatt-hour capacity will be in Sweden in 2023. It will be operated alongside Northvolt, a company that Volkswagen took a 20% stake in back in 2019.

Since taking that initial 20% stake in Northvolt, Volkswagen has been increasing that stake. Ivan isn’t sure if the amount has been disclosed. He also spoke about where the second Volkswagen gigafactory would be located — Salzgitter, Germany. He noted that it would be operated by Volkswagen starting in 2025 and shared another clip from Power Day, this one with Thomas Schmall, Volkswagen Group Board Member for Technology, speaking. “Back to Salzgitter. … This plant will be managed by Volkswagen. It will be the plant for the volume segment of the unit 5 cell. To start in ’25 means you need [to] move ground. You can see our Salzgitter facility and there you can see the new cell plant we [would] like to do there,” he said as the video clip showed footage of both sites.

Schmall described the second clip, which showed an empty space and pointed out that after a lot of work preparing and building the site, Volkswagen will occupy around 100,000 square meters at the Salzgitter plant — a perfect symbol of the company’s and industry’s transformation. “Salzgitter was the heart of our combustion engines. We are transforming this plant in a new technology. We’re transforming it in the future.”

I think it’s very poetic that Volkswagen is taking an iconic symbol of its combustion engines and transforming it into a battery cell production plant. As someone who supports Tesla (and holds a few shares in the Tesla), I hope that Volkswagen actually does succeed in this — it will become a true ally of Tesla and its mission to accelerate the transition to sustainable energy. This is about a future with clean air and a livable climate.

Ivan noted that the third gigafactory will be in Western Europe and shared a clip of Schmall talking about both the third and fourth plants. Volkswagen wants to have its third plant in Spain, Portugal, or France. “It depends where we get the best setup, ” he explained. The fourth one will be in Eastern Europe. Volkswagen hasn’t decided, but Schmall named Poland, the Czech Republic, and Slovakia as potential sites.

Ivan noted that Eastern Europe has been slow to make the switch to clean energy compared to Western Europe, and that it still has a number of dirty coal plants that are still in operation there. When Volkswagen picks a site to make batteries there, perhaps the media focus on Volkswagen, batteries, electric vehicles, and sustainability would add pressure to policymakers to look into cleaner energy. Hopefully.

Conclusion

Tesla could have 100 gigawatt-hours of battery production capacity in Europe by the end of 2022, and perhaps 200–250 GWh eventually. Volkswagen is planning six 40 gigawatt-hour factories in Europe for the coming decade. If all goes to plan, Europe could be witnessing the battery revolution firsthand and feeling the positive impacts of it as well by 2030. If you combine Tesla’s and VW’s potential for 2030, this would be a total of 490 gigawatt-hours of annual battery production capacity. While these two companies are having a European battery factory race, the winner of that race will be consumers.

Ivan noted that it will be fun to see which countries get a Volkswagen gigafactory. “It reminds me of the time that Texas, California, Nevada, and New Mexico battled to be the site of the Tesla gigafactory back in 2014.” You can watch Ivan’s full video here.

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