In a bid to get ahead in the battle to command the biggest share of the market for electric vehicles (“EVs”), German carmaker Volkswagen has revealed a massive plan to expand its production of batteries.
On Monday, the company revealed that it was going to construct half a dozen gigafactories within the European region. By 2030, these gigafactories should have the production capacity to churn out a total of 240GWh each year. According to a spokesperson of the company, such capacity is sufficient to provide batteries for 4 million units of Volkswagen ID.3 vehicles. One of the first of these huge factories will be constructed at Skelleftea in Sweden and another at Salzgitter in Germany.
The intention behind the construction of these battery factories is to lower the final cost of the batteries, which will in turn reduce the unit cost of the electric vehicles fitted with those batteries. Additionally, the car maker plans to recycle nearly 95% of the materials used in the process of manufacturing the batteries.
Volkswagen CEO Herbert Diess says that when the company creates a nearly one-size-fits-all battery system, the cost of those batteries will be trimmed by nearly half their current cost. Such reduced prices will bring EVs within the reach of more customers, which could drive a faster adoption of this sustainable technology. Diess added that over time, Volkswagen hopes to slash 50% from the cost of entry-level EVs and nearly 30% from what it currently costs to buy one of the standard EV offerings by VW.
The decision to ramp up battery production could also help Volkswagen avoid disruptions to its battery inventory as the company gears up to take on Tesla in the battle for buyers. In 2020 alone, VW sold 231,600 EVs. While this was only half what Tesla sold, VW had reason to celebrate because the sales figure marked a 214% increase from the company’s total sales in 2019.
Volkswagen is also intent on expanding its charging network as it grows its capacity to make EV batteries. The company has entered partnerships with Italian energy company Enel, British Petroleum (“BP”) and Iberdrola to increase VW’s public charging stations across Europe to 18,000 by 2025. At the moment, the company only has 3,600 charging points.
Volkswagen’s subsidiary Electrify America has been charged with the responsibility of setting up 3,500 fast-charging stations in North America before this year ends. In China, VW wants at least 17,000 such charging points by 2025. For comparison purposes, Tesla already has 20,000 charging points around the world, so VW has its work cut out if it wants to upstage Tesla.
With a global fintech solutions company such as Net Element (NASDAQ: NETE) joining the electric vehicle sector through a reverse merger, it remains to be seen what disruptions are on the horizon for the exciting EV space.
NOTE TO INVESTORS: The latest news and updates relating to Net Element (NASDAQ: NETE) are available in the company’s newsroom at http://ibn.fm/NETE
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