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Volkswagen falls out with unprepared Northbolt and turns to LG, SK, and Samsung
2022.01.04 07:00

Volkswagen is exploring the issue of supplying prismatic batteries with three companies, including LG Energy Solution (LGES), SK On, and Samsung SDI. It is said that the relationship with Northbolt, which was not ready for mass production, was creaking and began to come up with the next best solution. Samsung SDI is the only one that can meet the demand for prismatic batteries right now, but it is said that all three companies started calculating with the opportunity to expand cooperation with Volkswagen.

According to related industries, Volkswagen is currently requesting contracts to supply prismatic battery cells from all three domestic companies. The prismatic battery is a form factor that Volkswagen presented as a standard at the 'Power Day' last year, and it is also Samsung SDI's flagship product in Korea. Related industries are paying attention to the background of the continued courtship with LGES and SK On, which mainly produce pouch-type batteries.

Northvolt is a Swedish battery maker with a 20% stake in Volkswagen. It succeeded in producing the first lithium-ion battery cell last month and is about to start mass production this year. In a situation where Asian companies such as Korea, China, and Japan have virtually dominated the global battery cell market, it is considered a promising prospect jointly fostered by Volkswagen and the European Union.

The battery industry understands that Northvolt's mass production capacity has not met Volkswagen's level.

An industry official said, "For several months, there have been many stories about the relationship being broken because the Northvolt's mass production quality did not meet Volkswagen's level." It appears that it is not easy to go into mass production for a startup who has to develop battery cells as well as equip them with process and production technology according to the tastes of automakers”

LGES, with a long history, also suffered from yield problems for several years after entering Europe. However, in the case of LGES, the main obstacles were differences in the local workforce and culture at the time. Considering that Northvolt is mainly looking for key personnel from Korea and Japan, there are also observations that it may be difficult to raise its mass production capacity in a short period of time.

In the end, it is analyzed that Volkswagen will have no choice but to find three domestic companies to secure battery supply without any setbacks. This is because it is the only option that can secure production capacity and deliver according to the contract relatively early in a situation where electric vehicle sales are growing faster than expected every year.

It is said that the three companies are also judging the business practicality of Volkswagen's courtship. Although Volkswagen's shipments are considered to have low profitability, competition in the battery industry is gradually intensifying. For this reason, it is explained that it can be an opportunity to expand orders and strengthen cooperation with LGES and SK On, which have not produced prismatic batteries. In the case of Samsung SDI, it has been seeking cooperation since Volkswagen brought prismatic batteries to the fore last year.