How early is too early? VW to Rework $56 Billion Battery Push on...

How early is too early?

VW to Rework $56 Billion Battery Push on Samsung Deal Risk
By
Christoph Rauwald
,
Sohee Kim
, and
Oliver Sachgau
May 27, 2019, 4:59 AM EDTUpdated on May 27, 2019, 8:51 AM EDT

• Samsung able to deliver a fraction of agreed gigawatt hours
• VW behind auto industry’s biggest push into battery cars

Motoring journalists take pictures of a Volkswagen ID 3 electric car.
Volkswagen AG is making changes to its battery-purchasing plan worth about 50 billion euros ($56 billion) over concerns that one of its supply deals, with Samsung SDI Co. Ltd., might unravel, according to people familiar with the matter.

Samsung initially agreed to deliver batteries for just over 20 gigawatt hours, enough to power 200,000 cars with 100 kilowatt hour packs, before different views on production volume and schedule emerged during detailed negotiations, said the people, who asked not to be identified as the talks are confidential. The impasse cut pledged supplies to less than 5 gigawatt hours, they said.


Earlier this month, VW outlined a project to build a domestic battery-cell factory in Germany together with Swedish startup Northvolt AB for almost 1 billion euros with capacity of 10 gigawatt hours. VW plans to take a final decision later this year.

VW’s electric rollout in the next ten years translates into battery demand of more than 300 gigawatt hours in Europe and Asia alone, outstripping current market capacities.VW has picked LG Chem Ltd., Samsung and SK Innovation Co. as battery suppliers for Europe along with Contemporary Amperex Technology Co. for China. It later added SK Innovation as partner for North America as well, starting in 2022. The huge investments required to ramp up battery-production capacity have stoked intense rivalry, highlighted by a lawsuit LG Chem filed in the U.S. against SK Innovation over allegedly stealing secrets. SK Innovation has denied acting improperly.