Auto giants invest in battery supply chain

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Mercedes and Volkswagen are taking different approaches to securing battery supply chains

Mercedes and Audi are entering partnerships with battery specialists for improving the supply chain

As global automotive manufacturers look to secure their supplies of batteries into the future as demand accelerates and supply chains remain fragile, two of the top car makers in Germany are taking different approaches to establishing robust battery supplies for the next decade.

VW invests in China

Volkswagen Group is turning its eye eastward and sinking its money into China, where Volkswagen Group China is starting the construction of a battery system production factory in Hefei in the Anhui province. “VW Anhui Components” is the first battery system plant to be wholly owned by the Group in China and will have an initial annual capacity of 150,000 to 180,000 high-voltage battery systems based on the Group’s Modular Electric Drive Toolkit (MEB platform).

The 45,000 square meter plant will be located next to the production facilities of Volkswagen Anhui, VW’s first majority-owned joint venture for all-electric vehicles and the group is investing over EUR 140 million up to 2025 in the new plant and its facilities, with the start of production targeted for the second half of 2023.

According to Dr Stephan Wöllenstein, CEO Volkswagen Group China, the platform strategy is an existing competitive advantage which VW is transferring into the e-mobility era and he sees the group’s activities in China as crucial to achieving its goals as part of its electrification strategy.

“With a significant increase of battery-electric vehicles (BEVs) in the future, we need to focus on keeping key components like battery systems within our own value chain, allowing us to take advantage of group-wide synergies and innovations”, he says.

According to Thomas Schmall, CEO of Volkswagen Group Components, Anhui is an important pillar of VW’s global battery strategy, which leads from vertical integration in the raw material market via building battery plants, as well as cell factories in collaboration with partners to second life systems and recycling.

“Currently, we are building up three MEB battery manufacturing facilities in Asia, Europe and the USA to be able to meet the growing demand for MEB battery systems in the future. Our blueprint factory in Braunschweig, Germany, is ready to produce up to 500.000 battery systems a year and is assisting in our capacity build-up,” he says.

Internal Capacity

VW Anhui Components will be located in the nearby supplier park of Volkswagen Anhui’s EV-production site, which brings logistical and cost efficiencies and a faster time- to-market. It will make use of existing synergies with the Group’s wholly owned battery plants and workshops in Braunschweig (Germany) and Tianjin (China), as well as enhance ties and synergies with the MEB battery plants of Volkswagen Group’s Chinese Joint Ventures.

The Braunschweig plant will take the lead for the planning, development and production of battery systems. Experts from Germany provide support at the international facilities currently being set up, including in Anhui. The experience gained at the Braunschweig plant, which has been running since 2019, is thus transferred across the Volkswagen Group. In addition to experts working on site, there are also teams working from Germany as bridgeheads in the collaboration. At the same time as Anhui, battery assembly capacities are also being set up in the Czech Republic (Mlada Boleslav) and in the USA (Chattanooga). The plan is to manufacture more than 1 million battery systems per year in a few years.

The battery system for MEB vehicles consists of several cell modules, a cell management controller, a battery management system and a connector strip, which are interconnected via high-voltage connectors and protected in an aluminum battery housing. In terms of the manufacturing process, there will be two production steps each with two production lines – one for frame production and one for system assembly. Consistent with the Group’s vision for a digitised manufacturing process, the production, assembly and testing of the battery systems will utilise cutting-edge technology and involve a high level of automation at each stage. Prototype production has already started at the Group’s Tianjin plant.

Mercedes Joins Euro Champion

Mercedes-Benz has joined Stellantis and TotalEnergies in Europe as a new partner of Automotive Cells Company (ACC). Following its entry, the partners commit to increase ACC’s industrial capacity to at least 120 GWh by 2030.

ACC is the result of an initiative taken last year by Stellantis and TotalEnergies and supported by the French, German and European authorities, to create a European battery champion for electric vehicles. The entry of Mercedes-Benz in ACC is a clear demonstration of the industrial progress and of the merits of the project, which it will strengthen.

ACC’s objective is to develop and produce battery cells and modules for electric vehicles with a focus on safety, performance and competitiveness, while ensuring the highest level of quality and the lowest carbon footprint. The updated ACC capacity plan will mobilise an investment of more than seven billion Euros, which will be supported by subsidies and financed by equity and debt. The creation of this European battery champion will support Europe to address the challenges of the energy transition in mobility and ensure its security of supply of a key component for the electric car industry.

With Mercedes-Benz added to the partnership, the European Battery Champion group combines the deep technological expertise in battery development of TotalEnergies, Stellantis’ sustainable mobility system knowledge and the research and development expertise of Mercedes-Benz.

Yann Vincent, CEO of ACC believes the involvement of Mercedes-Benz is a major milestone for ACC, since it will bring a vote of confidence into the group’s technology roadmap and product competitiveness that significantly strengthens ACC’s business potential and underpins its ambitious growth plans.

According to Ola Källenius, CEO of Daimler and Mercedes-Benz, the newly formed group will develop and efficiently produce battery cells and modules in Europe, which are tailor-made to specific Mercedes-Benz requirements.

“This new partnership allows us to secure supply, to take advantage of economies of scale and to provide our customers with superior battery technology. On top of that, we can help to ensure that Europe remains at the heart of the auto industry – even in an electric era. ACC aims to more than double capacity at its European sites to support Europe’s industrial competitiveness in the design and manufacturing of battery cells,” he says.

Patrick Pouyanné, TotalEnergies’ Chairman and CEO sees the involvement of Mercedes-Benz as adding considerable weight to the initiative originally taken by TotalEnergies and Stellantis, providing clear support to the group’s ambition to create a European battery champion.

“Together, we are bringing all our skills to contribute to the sustainable development of mobility,” he concludes.

Jonathan Newell
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