Battery supply is going to explode in the next years. But either way, this is not like the eGolf situation of old. It's not an isolated experimental vehicle sold in small numbers. They built an entire platform for building many different models of electric cars.
People mistake VW trying to squeeze as much as they can out of combustion engines for VW ignoring the future. Tesla forced their hand and has a real headstart. But consider this. While Tesla was figuring out how to build a single car at scale, VW has spent the last ten years figuring out how to build dozens of models from SUV to city car from a joint technological platform [1]. And they have spent the last three years developing a version of that platform for electric vehicles [2].
You mean being the undisputed king of the hill in terms of online battery production manufacturing capacity in a market that right now seems to have an unlimited demand for batteries? They are building new factories as fast as they can with a head-start on everybody else and they seem to be getting really good at it.
VW is planning to be where Tesla is this year in about five years in terms of GWH per year. Tesla is moving really aggressively in terms of new production capacity, partnerships with Panasonic and others, and strategic investments in supply chains as well as expansion into other applications for batteries (e.g. supporting the grid). I'd say, it will be a while before anybody catches up in terms of volume and economics. It's going to require more than what VW is investing right now. And I think they will invest quite aggressively. This isn't their last move; just the latest one.
Do you have any info about VW's batteries? If they are building up MEB for the next 2-3 years, they should have some idea of what they are going to do about batteries by now right?
So far, it appears that batteries and drive train efficiency are the secret to Tesla's dominance in efficiency. VW would be a dumb competitor if it comes out in 2-3 years with a car that costs as much or more than a Tesla with only 60% of its range.... there is risk for VW as well here..
If VW wants to make 30k+ EVs per day, they would also have to figure out how to make batteries for all those cars.
Right now, Tesla's GF1 and 3 have that locked down with a significant head-start in time as well as tech. They started in 2013 because they foresaw that 500k cars per year would use up the entire world's battery production. They also acquired Maxwell tech to further stream line their cell production with denser and easier-to-manufacture cell chemistry. All of that will be big hurdles for other OEMs to overcome (and that is IF they dedicate resources to it without half-assing it for compliance purposes).
They have just now started developing all of this, while lots of manufacturers only need to ramp up their production, see Hyundai, Kia, Renault, Tesla, which are all already selling full electric cars and just struggle with fulfilling the orders.
If those manage to scale their production (probably of batteries), VW will have a hard time.
My only concern with VW is whether they'll be able to produce those battery packs as fast as the cars. They're certainly ambitious, they want to make 100k the first year and the plant they're using can make 1,500 a day which sounds insane when you hear Tesla is only making 5,000 a month.
Lots of models, but where will the batteries come from? Only Tesla seems to have the proper vertical integration although I've heard VW group is investing in battery factories.
Smart move to invest in production capacity for batteries developed in house. There are now several car manufacturers securing large amounts of battery capacity and several that clearly have issues with this. VW announced they have secured enough volume for 1m cars until 2023. That sounds like a lot until you realize that Tesla volumes are probably hitting that a lot sooner. Hence their other announcements that they are merely trying to keep up with Tesla as opposed to beating them (which is not a realistic goal for them short term).
Basically there are several companies who at the same time are trying to secure battery supplies while still peddling hybrids and hydrogen as well because they know they don't have enough batteries. E.g. Hyundai and Honda have a few popular EV models that are pretty hard to order (long delivery times/waiting lists) because production volume is limited. The reason is not because the manufacturer doesn't want to sell more but because they are unable to produce more; mainly because of a lack of access to batteries.
GM making this move means they mean business. They announced lots of different EV models a few days ago and to ship them in volume, they'll need batteries. Obviously they seem confident about their technical ability. We'll see. But getting production volumes up is going to be key for them. The demand is currently being served by their competitors (Tesla mainly).
The article contains predictions that VW will go from 26k electric cars sold in 2018 to 1.4m in 2025, while the current sales leader Tesla will only manage to go from 200k to 400k. There's a bunch of rhetoric in the article from car manufacturers that they will easily win because they've been building cars for a century. Statements like we were not in the production hell, and we are still not, and we will not get into any kind of production hell from an Audi executive. However there's very little talk about the most likely bottleneck they will face, which is battery production. There's a brief note that automakers are snapping up every battery they can find but no discussion of any potential problems they might encounter in snapping up enough to sell millions of electric cars per year. The much repeated 100 year experience certainly doesn't apply to battery production. Not only that, but even the battery manufacturing companies don't have experience in producing batteries in such quantities. It's still very much uncharted territory.
VW invested before they went public and they likely got in a much lower cost and later added on top but received not just stock but also partnership agreements. And the investment for a company like VW isn't that big. A company the size of VW can take such risks.
VW has invested far more and far more aggressively in Northvolt for example.
> Your analysis merely shows that you don't see the value of a battery with roughly 2x the energy density, 2x the charging times
No I question that when they can produce these batteries in relevant volume that their advantage will be nearly as big.
And far more important is actually price. Manufactures are INCREDIBLY price sensitive. There might be some premium for extra performance but they are far smaller then most people imagine.
> I don't think it's going to be that easy for other companies to simply catch up without a lot of R&D.
What I am telling you that there is MASSIVE amounts of R&D going into silicon. Like 10x more then Lithium anodes.
Both on individual company level and huge amounts of startups as well.
> Existing battery factories won't magically turn into factories for entirely different batteries.
Actually, yes they will depending on your definition of 'new'. There are 30+ year old battery factories still operating with newer chemistry.
Most silicon startups and processes are design according to specification to be valid feed stock for typical Li-Ion production.
It is totally viable for existing factories to switch to very, very different anodes and cathodes.
Actually, yes they will depending on your definition of 'new'. There are 30+ year old battery factories still operating with newer chemistry.
This is not universally true. Tesla for example is doing its own thing for example with dry electrodes, and are far less compatible.
> Most electrical cars produced by the end of this decade will be built in factories that don't exist yet.
Most EV will produced in factories that are currently in advanced planning, literally 99% of those will not be lithium metal anode factories.
> That's the opportunity for Quantumscape.
I'm not denying that they have an opportunity. But company with huge tech, market risk and price risk is a very risky investment. They have not made profit and wont make it for many more years.
Their valuation now is of course far more reasonable then when I originally made this argument, but its still rather high for me. But I would have to spend more time on analyzing to say what I think they are worth.
I like to ask, how many years of highly successful execution is required to for the company be a solid self standing company. For QS this is likely about 8-10 years.
> If they have something competitive by 2024
They wont. By then they are in sample production of a tiny factory. You massively underestimate how much time and effort it will require to build a real modern mass production facility that can directly compete to go into modern car production line.
If they are lucky by 2025 one of their partners will make some sample luxury cars with their batteries in them. Maybe in 2026-2027 some new luxury car will actually go into series production with these.
The problem everyone has is producing enough batteries. Tesla secured supply early when people thought they were crazy for wanting so much capacity. As it turns out, they need much more and they are building their own cells and factories. VW recently announced they have enough batteries to build ~1 million cars until 2023. Tesla might be hitting that as the annual production before that time. Other manufacturers are struggling to secure access to batteries and are supply limited even if they have interesting models that people want to buy (like some Honda or Hyundai models).
IMHO, most manufacturers need another five years to straighten out their supplies and then another five to scale down their legacy business. That's why you see the likes of Toyota talking about hybrids a lot because they simply can't scale up EV production right now even if they wanted to. Because they lack access to enough batteries.
Some manufacturers have wisened up. It looks like VW and GM have pretty solid plans and are expanding production as fast as they can. But they are talking about keeping up with and not overtaking Tesla. At least VWs CEO is.
VW has a massive battery order spread between Samsung, LG and CATL, but yeah, I agree Tesla will have a solid lead on battery production for a while.
I wonder if Tesla/Panasonic will at some point start selling mass produced batteries to the traditional car manufacturers. Once EVs become mainstream, consumers will start expecting choice.
EV boom will propel the battery manufacturer to be the next manufacturing Behemoth. It's so much a core of any EV that the industry capital has to be consolidated to be able to produce sufficiently good product and iterate rapidly to match the market demand.
"VW is "building six battery factories in Europe alone"."
Interestingly VW's six factories by 2030 produce totally about as much (240 GWh) as Tesla's one Berlin factory, which is due to start limited battery production in 2023, starting at 100 GWh per year, later ramping up to 200-250 GWh.
I think you underestimate how far Tesla already is:
- Northvolt doesn't have a factory for production yet. When they plan to open in 2020, Tesla is probably already constructing its second or third battery factory. Also mind the amount of batteries needed for mass-market EV.
- Tesla is said to have a significant edge in battery production cost, compared to its competitors. Given that the batteries are the most expensive part of an electric car, that's significant.
- Without checking all european car manufacturers: At least the first mass-market EV from VW is expected to hit market in 2020.
There's good reason to believe that electric cars are the future and will soon be a massive market. I think there's also good reason to believe that Tesla has a big head start on the competition and has the opportunity to dominate this market if they execute well.
For example, just look at the battery packs which are essential to an electric car. Tesla was unable to find a supplier that could meet their requirements, so they designed and produced their own batteries and now have a $5 billion gigafactory to increase production volume and decrease costs (with more gigafactories on the way). If you're another car company trying to enter the EV market, what are your options? Buy inferior battery packs at a higher cost from a different supplier? Try to replicate Tesla's battery technology and then convince your board to build a gigafactory so you can produce them at the required volume and cost?
Ford believes they have the battery supply for a 600,000 EV/year run rate by late-2023 and are shooting for 2,000,000/year by 2026.
Bloomberg projects VW selling more EVs than Tesla by 2024 and they are planning to have 240GWh/yr of in-house battery production by 2030.
BYD in China is fully vertically integrated on EV production, moreso than Tesla who relies on 3rd party mining and on Panasonic for chemistries/cell production. BYD is now the largest PHEV+BEV manufacturer in the world.
Tesla might have had a head start but There has been a lot of catching up going on, and as we get closer and closer to resource constraints instead of production constraints they aren't in much better of a position than any other manufacturer.
People mistake VW trying to squeeze as much as they can out of combustion engines for VW ignoring the future. Tesla forced their hand and has a real headstart. But consider this. While Tesla was figuring out how to build a single car at scale, VW has spent the last ten years figuring out how to build dozens of models from SUV to city car from a joint technological platform [1]. And they have spent the last three years developing a version of that platform for electric vehicles [2].
[1] https://en.wikipedia.org/wiki/Volkswagen_Group_MQB_platform
[2] https://en.wikipedia.org/wiki/Volkswagen_Group_MEB_platform
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