Volkswagen doubles electric vehicle battery procurement contract size to 305.2 billion yuan

Volkswagen will not launch electric vehicles on a large scale until next year, but it has already begun to secure its battery supply so that it can mass-produce these new electric vehicles next year. After announcing that it had won a $25 billion (about 159 billion yuan) battery contract, the German automaker announced this week that it has doubled the size of its battery procurement contract to $48 billion (about 305.2 billion yuan).

The figure is roughly equivalent to Tesla's market value and double what Volkswagen Group was planning just weeks ago, highlighting how serious the automaker is about electrifying its vehicles.

Based on Thursday's closing price, Tesla's market value was US$48.29 billion (about RMB 307.1 billion), falling below US$50 billion (about RMB 317.9 billion), second only to General Motors.

The company aims to reach $50 billion (about 317.9 billion yuan) in battery procurement contracts by 2025 to meet the battery needs of automakers.

At the time, Volkswagen CEO Matthias Müller said: "In the past few months, we have done our best to ensure the implementation of the "Roadmap E" production plan with the necessary speed and determination. Last fall, when the "Roadmap E" production plan came out, Volkswagen announced plans to produce 3 million electric vehicles per year by 2025 and launch 80 new electric vehicle models. And this year, 9 new cars (including 3 pure electric vehicles) will be added to the company's list of electric vehicles or plug-in hybrid vehicles."

By 2025, Volkswagen hopes to produce 3 million electric vehicles per year, including all brands including Volkswagen, Audi, Porsche, etc. But now, this does not mean that Volkswagen will immediately invest $48 billion (about 305.2 billion yuan) to produce batteries for electric vehicles.

Currently, the global supply of specialized automotive batteries is very limited. It is difficult for automakers, especially startups, to secure supply from suppliers. That is why many manufacturers are considering producing their own automotive batteries.

Volkswagen also considered this, but the company ultimately decided to abandon this approach. Instead, the company chose to sign long-term contracts with battery manufacturers and encourage battery manufacturers to make more investments to expand production capacity so that they can develop together with Volkswagen's electric vehicle business.

While these contracts are somewhat binding, they are likely to include clauses based on advances in battery technology, which is expected to become much cheaper to produce over the next decade.

At present, the German automaker has not disclosed the list of battery manufacturers with which it has signed contracts, but outside speculation may be LG Chem, Samsung SDI, Panasonic or CATL.

Technically, Volkswagen's electric car production plan should start with the Audi e-tron quattro this year, but will expand significantly next year. By 2020, there will be multiple ID series electric cars entering the market.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.