US Volkswagen chief sees challenges in increasing domestic battery production

Attracting skilled workers, improving infrastructure and addressing supply chain issues are all necessary if the United States is to increase battery production to meet growing consumer demand for electric vehicles (EVs), the week said. last of the most senior American executive of Volkswagen.

Scott Keogh, chief executive of Volkswagen Group of America, told an Automotive News forum in Washington that US production of lithium-ion batteries, currently at 150,000 to 200,000 a year, will need to increase to 8.5 million in seven years. to meet projected needs. .

“This is a scale of investment that, honestly, is going to make the Industrial Revolution look like a walk in the park. That’s huge,” Keough said.

OEMs, in partnership with battery manufacturers, have announced investments totaling tens of billions of dollars in new battery plants and electric vehicle assembly plants in North America, as the industry and the country s move away from internal combustion engine (ICE) vehicles. President Joe Biden has set a goal for 50% of new vehicle sales to be plug-in hybrids or 100% electric by 2030.

The shift to electric vehicles, Keough said, poses a number of challenges, including attracting enough skilled workers, dramatically expanding mining in the United States for critical minerals needed to produce electric vehicle batteries, issues supply chain and improving health care, education and infrastructure.

“I think America obviously needs to focus on batteries, because that’s the kind of stuff you can’t ship around the world,” he said. Other necessary components, such as semiconductors, can be obtained through global trade at much lower prices, he added.

One obstacle is to build “a collective ecosystem [for] turn America back into a manufacturing society,” he said. “I think America has become a service economy, if we’re honest with ourselves, and the challenge of having someone who worked at a Starbucks, takes 20-minute breaks, smokes a cigarette and now jump into a factory… is a whole new world.

“It’s easy for someone like me, or someone in this room, to say, ‘Yes, manufacturing is great.’ OK, go work in a factory. You know, we throw [around] this term three teams – three teams is a beautiful thing. What exactly three shifts means is that someone works at three in the morning. … It is brutal, difficult and challenging work.

Electric vehicles “a bet worth taking”

Keough said Volkswagen’s decision to invest in North American production of its ID.4 all-electric SUV was “a worthwhile gamble” with expected production of 7,000-8,000 vehicles per month in its assembly plant in Chattanooga, Tennessee.

With Volkswagen’s German assembly plants facing European demand four times greater than their capacity and unable to supply vehicles to the US market, Chattanooga was “probably one of the biggest corporate bets…that was made” , did he declare.

“The power market then was around 0.2%, 0.3% and now it’s 6.7%, doubling all the time. And I think we’re going to release 7,000 cars a month with the ID.4,” he said. He predicted that “we’ll start to see inventory, weak inventory, probably around, say, the first second quarter of 23.”

Keough said he doesn’t expect the global chip shortage to significantly affect US ID.4 production. “The good news, when you look at the group’s rules on token allocation, obviously it starts with profitability. So many luxury brands have access to chips. But the next level is if you have a new electric car and a factory. So the good news is that we’ll get the chips from that factory. We’ll get the cars.

Charging stations

Keough said OEMs are in “an awkward position” because the consumer demand they rely on is partly driven by factors they don’t control, such as the availability of charging stations.

“I think the demand factor has been there and it’s been strong,” he said. “My reading on infrastructure, the reason I’m less shaken is that I think if there’s one thing America is good at, it’s pursuing a business opportunity.

“I see it every day with Electrify America. I see it with the different brands. And I think the investor will be there to pursue a business opportunity. So maybe I’m less worried on that front than others” , did he declare.

Two factors stand in the way of wider adoption of electric vehicles, Keough said: affordability and families’ need for three-row vehicles.

Producing an electric vehicle with a list price of $20,000 “is going to be extremely difficult, whatever scale effect you can get with the cost environment that we see with commodities and everything else” , did he declare.

“As you know, the market went from an average transaction price of, say, $34,000 to $45,000. I think we know that the income of the American consumer has not increased that much. So I think in that environment we’ve seen probably two to three million Americans walk away from the auto market because it’s become too expensive.

For those buyers, a $20,000 Jetta or a $22,000 Taos, both ICE vehicles, will be a better fit.

More information

Volkswagen invests in testing and recycling electric vehicle batteries

Pictures

Feature image: Manufacture of battery systems for the ID.3 and ID.4 at Volkswagen Group Components Braunschweig. (Provided by Volkswagen)

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