In February 2016, Mercedes-Benz said it would not invest in the production of electric vehicle batteries in the future. Daimler CEO Dieter Zetsche said that the current battery overcapacity in the market, at least in the next four to six years will not be combined with other German luxury brands to build battery capacity, "for us, the most stupid thing is to give Overcapacity is on the fire."

Less than a year, the Volkswagen Group expressed the opposite concern. The Volkswagen MEB electric vehicle platform will produce a large number of electric vehicles, and the company is also looking at the battery supplier that wants to cooperate. This electric vehicle battery contract will be the largest order in the near future. Volkswagen Group strategy executive Thomas Sedran said in an evaluation of the six largest global battery suppliers for competitive orders last month: "Insufficient capacity. No one has enough capacity."

The global emission regulations are tightened, and the pressure on the motorization of car engines is increasing. One big question before us is whether the battery capacity of electric vehicles in the next 10 years can meet the fast-growing demand predicted by car companies.

Many car companies are optimistic about the future development of electric vehicles. Volkswagen plans to sell 2 to 3 million pure electric vehicles by 2025. In 2020, Tesla's global electric vehicle sales target is 1 million units. Nissan expects electric vehicles to account for 20% of its European sales, while Ford predicts that electric vehicles will account for 15% to 20% of the Chinese market.

Mercedes-Benz predicts that by 2025 battery cars will account for 15% to 25% of global sales. BMW is the same, but BMW predicts that it includes a plug-in hybrid. Ford is also a member of the electric car optimist.

These optimists are justified. First of all, the mileage of electric vehicles has increased. GM, Renault electric vehicle mileage has made great progress. GM said that the Chevrolet Bolt can charge more than 500km on a single charge. Renault's second-generation Zoe has a range of more than 400km. The capacity of LG Chem's lithium battery for Renault has increased from 22kwh to 41kwh. Some executives and analysts predict that the next increase in mileage will occur around 2019.

Price drop

Battery prices are another important obstacle to the development of electric vehicles. But as energy density increases, battery prices are also falling. BNP Paribas analysts have released a very optimistic outlook for electric vehicles. The report points out that by 2020, the price of battery packs will be halved to $215/kwh, and by 2025 the price will drop to $140/kwh. Cai Che is obviously more optimistic. In an interview with the European car news, he said that he had the opportunity to see the price of the battery pack drop to 100 euros / kwh, but he did not specify the specific time.

According to the above predictions, by 2025, compared with traditional internal combustion engine vehicles, car companies can obtain more profit from the electric vehicle business. The company said that the tipping point for mass production of electric vehicles is just around the corner.

Based on this understanding, BNP Paribas said that an average car needs 70kwh capacity of batteries, in order to meet the needs of 8.6 million vehicles, it is estimated that the global battery shipments will need to reach 600gWh in the future.

According to data provided by Swedish consulting firm EV Volumes, the current global lithium-ion battery shipments are 41.57gWh. Among the car companies, Tesla aims to meet the annual delivery of Model 3 500,000 units in 2018. It has built a Nevada plant in the United States with shipments of up to 35gWh. In addition, Tesla's second Giga plant is scheduled to settle in Europe.

The gap is huge and does not produce batteries

Most other car companies rarely have Tesla's intention to produce batteries because they lack technology. Volkswagen Group Sedran said: "Frankly, if we compare with Samsung and LG, our gap is a long time away." Sedran estimated that the battery cost of supplying Volkswagen electric vehicles would cost 20 billion euros. “We need to check to see if the economics of the six battery suppliers bidding are enough to create the required shipments.” Sedran did not say whether the final order would be for a single or multi-year apportionment.

In the European market, Nissan, a large-scale manufacturer of lithium-ion batteries, is based in Sunderland, England, and is currently using low-capacity lithium manganate.

However, Nissan may stop producing batteries and only produce battery packs. Both Renault and Daimler believe that there is no need to produce batteries themselves.

In December 2015, Daimler's battery factory Li-Tec was shut down, and Daimler also stopped the production of its own batteries. Cai Che said that Daimler has the best batteries, but this advantage is of little value, because customers can't feel the difference.

Dangerous goods

Volkswagen Sedran pointed out that the battery supplier's site needs to be close to the customer's factory, because long-distance transportation of the battery is both costly and dangerous. “They are dangerous goods and there is no insurance for transporting lithium-ion batteries.”

Two large battery suppliers will set up factories in Europe. LG Chemical's European plant site is located in Poland. The plant has a capacity of up to 100,000 batteries and has a cruising range of 320km. Production is expected to start in the second half of 2017. In addition, LG Chem has plants in Michigan, Nanjing, China and South Korea. Another company, Samsung SDI's European plant, will start construction in 2018.

Wolfgang Ziebart, director of product design and technical development for Jaguar Land Rover, pointed out that battery production will grow rapidly in a certain period of time.

Future breakthrough

If there is anything to convince the public to produce batteries themselves, it is the development of solid-state battery technology. Volkswagen holds a stake in Silicon Valley's QuantumScape, a company that uses solid-state battery technology as its research and development direction to improve battery performance. Volkswagen hopes to boost its electric vehicle performance, especially its cruising range, with QuantumScape's battery energy storage technology. Sedran said the technology is expected to be used in Volkswagen electric vehicles in 2022. He has pointed out that the Volkswagen Group will produce solid-state batteries at the Salzgitter plant in Germany.

However, any battery produced by Volkswagen will only be used in high-end vehicles at least initially, and mainstream models will have to wait. The car companies that study solid-state batteries include Toyota Motor Corporation, which has been hesitant about battery cars for many years.

Regardless of the future growth rate of electric vehicles, it is certain that the current situation is pushing car manufacturers and suppliers to make changes.

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