Volkswagen puts pressure on battery partners to build 'gigafactories'

Volkswagen is pushing its joint-venture partners, including SK Innovation (SKI), to build plants for electric-car batteries that have manufacturing capacities of at least one gigawatt, chief executive Herbert Diess told Reuters.

"Anything below that amount would make little sense," Diess said on the sidelines of the Shanghai Auto Show in China on Sunday.

Volkswagen will buy 50-billion euros' (roughly R790-billion) worth of battery cells for electric cars and has identified South Korea's SKI, LG Chem and Samsung SDI as strategic battery-cell suppliers, as well as China's Contemporary Amperex Technology (CATL).

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The German automaker is retooling 16 factories to build electric vehicles and plans to start producing 33 different electric cars under the Skoda, Audi, VW and Seat brands by mid-2023.

"We are considering an investment in a battery manufacturer in order to reinforce our electrification offensive and build up the necessary know-how," said Volkswagen.

SKI is building a battery-cell manufacturing plant in the US to supply VW's plant in Chattanooga, Tennessee. The company will supply lithium-ion battery cells for an electric car that VW plans to start making in Chattanooga in 2022.

LG Chem, Samsung and SKI will supply battery cells for VW in Europe.

CATL is the automaker's strategic partner for China and will supply batteries for its electric fleet from 2019.