Mr. Schmall, VW is investing 15 billion euros in battery cells. But electric cars are selling poorly. Are you investing into a slump?
Ups and downs are normal; transformations don't proceed linearly. What's crucial is the long-term development, and that's clearly moving towards battery-electric propulsion. Our job is to prepare for these fluctuations. That's why I can't understand when it's said that we've scaled back our plans in the battery sector.
Haven't you?
We never said that we wanted to manufacture all the batteries we need ourselves within the VW Group. From the beginning, the plan was to produce half ourselves and purchase the other half.
Why is VW spending so much money on its own batteries if you can also get them from suppliers?
Because the battery is a core technology of the electric car. It's as important as the engine in a gasoline or diesel vehicle. But today, the auto industry is almost entirely dependent on Asian battery manufacturers. We need to change that.
Forecasts say that next year, when the first VW cell factory is due to start, there will be five times as much production capacity for batteries worldwide as needed.
Important competitors like Tesla and BYD are making their own batteries for good reasons. If we want to take a leading role in battery technology, just as we do today in combustion technology, then we have to take it into our own hands. At the moment, figuratively speaking, Western automakers are just passengers riding in the back of the bus. Others decide where it's going. We need to get behind the wheel ourselves. Volkswagen aspires to become a technology leader in batteries - just as we are with combustion engines.
However, in 2021 you announced the construction of six cell factories, five of your own and one with your Swedish partner Northvolt. Now only three of your own are planned alongside Northvolt. Are you scaling back?
With our battery division Power Co, we originally planned five cell factories with up to 40 gigawatt hours each per year, totaling up to 200 gigawatt hours. Mathematically, that's enough for about 2.5 million electric cars. Then North America became a highly interesting production location due to government subsidies and low electricity prices. We reacted to that and redistributed the capacities. We're now building fewer battery factories, but a very large one in Ontario, Canada. At the three locations in Salzgitter, Valencia, and Ontario, we're currently planning for up to 170 gigawatt hours.
And that's less than the 200 gigawatt hours that were originally planned.
There's still time until 2030. If needed, we can easily expand our sites in Valencia and Ontario. In Salzgitter, on the other hand, expansion is difficult, already due to space constraints. I don't know today whether the expansion in Spain and Canada will come. But in the six years until 2030, it's certainly feasible if needed.
Are you backing away from your 200 gigawatt-hour goal here?
No. Our goal is still realistic, but it's not set in stone; building battery cell factories isn't an end in itself. The expansion of the plants will depend on how the market for electric cars develops. We are flexible.
Currently, customers are hesitating to switch to electric cars. Has VW focused too one-sidedly on battery-electric driving?
This accusation always annoys me. We committed to e-mobility early on. Among established automakers, Volkswagen is one of the best positioned; no one sells more electric vehicles. At the same time, we still have a strong business with conventional vehicles and plug-in hybrids. We can therefore react much more flexibly than manufacturers who only build one or the other. The markets are developing very differently. In China, more electric cars than combustion engines were sold for the first time in July.
But in Europe and the US, electric car sales aren't doing so well. Aren't you worried at all about the utilization of your new battery factories?
There are flexibilities there. We're not building our factories all at once, but doing it step by step in blocks of 20 gigawatt hours each. We planned it this way from the beginning. If the demand isn't there yet, I can also postpone the construction of a block and, for example, initially build only 20 gigawatt hours in Valencia instead of 40 or 60. Our biggest problem at the moment is something else entirely.
Namely?
We agree that the future belongs to e-mobility. This transformation is costing our industry an immense amount of energy. Nevertheless, customers are currently being extremely unsettled from various sides. They're being told: We don't even know if the electric car will prevail. I simply can't understand that.
Some are betting on running combustion engines with climate-friendly synthetic e-fuels.
Of course, we're also looking at e-fuels, which will play a role in certain markets and for existing vehicles. But in the mass market, they won't be available in the necessary quantities and at affordable prices.
In German politics, the Union, FDP, and AfD are calling for new cars with combustion engines to be allowed to be sold in the EU beyond 2035. Are they wrong?
The ban is not the crucial point. The real question is: Will we succeed in convincing customers of the electric car because it offers them advantages?
So you don't have a problem with politicians making a stand against the combustion engine ban?
I do have a problem with that, because it suggests that there are better technological alternatives to battery-electric propulsion, which is definitely not the case for new cars in the volume segment. Manufacturers need planning security. We have invested billions and are working towards offering only electrically powered new vehicles in Europe from 2035. And we have to be honest: If we postpone electrification, it will be difficult to achieve our CO2 targets. When it comes to climate protection in car traffic, there is no alternative to the electric car on a broad scale.
Competitors see it differently. BMW CEO Oliver Zipse warns that the industry is making itself vulnerable to blackmail by committing to battery-electric cars.
You become dependent when you give up control of the battery. Again: We need clear framework conditions, a direction in which to march. We can't say today that we want to go north, and tomorrow it's said we're going east, and the day after tomorrow we should go south. Then we'll just be running in circles.
It's said that Germans are hesitating with electric cars because there aren't enough charging stations. Is that true?
That's now primarily a question of communication. In reality, the provision of charging stations is much better than many believe. Roughly estimated, we have about 115,000 fuel pumps for combustion vehicles in Germany today, but more than 150,000 public charging points for electric cars. Of course, there's still a lot to do, but we're not living in a desert without charging infrastructure.
Many customers still find electric cars too expensive, which is due to the costly batteries. When will they be cheap enough for electric cars to compete with combustion engines?
The decisive lever for battery costs are the raw materials and battery chemistry. Iron phosphate batteries, so-called LFP cells, are significantly cheaper than the NMC cells that dominate in Europe. We will therefore soon have this technology in our portfolio as well.
Tesla and Chinese manufacturers have been installing LFP batteries for a long time. Have the Europeans missed this trend?
I wouldn't say that; we just had other priorities initially. In the early years of e-mobility in Europe, the focus was primarily on achieving the highest possible ranges, and that's achieved with the more expensive NMC batteries. Meanwhile, many drivers have realized that these ranges aren't so important to them.
Would you opt for LFP batteries earlier if you had to decide again today?
Yes. The entry-level segment of electric cars needs more affordable batteries.
Will you produce LFP batteries at the start of your first battery factory in Salzgitter at the end of 2025?
I don't want to say anything about that today; it would be doing the competition a favor. Just this much: Our unit cell is flexible. The factories are designed so that we can switch from NMC to LFP within a few weeks.
And when will you build the first solid-state battery, which allows for more range and faster charging?
Still in this decade.
How dependent are your battery factories on Chinese raw materials?
At the beginning, we will have a Chinese-influenced supply chain; by the way, this applies worldwide to all cell manufacturers. Because even if the raw materials come from elsewhere, processing so far takes place mainly in China. But we will gradually stand on our own feet and build up a local, robust battery supply chain. We're not only investing in battery factories, but also in our own raw material supply. So that we no longer sit in the back of the bus, but at the front at the steering wheel.