Report: VW, Samsung Reassess Battery Deal

Volkswagen AG may revise its €50 billion ($56 billion) battery sourcing strategy for electrified vehicles because Samsung Electronics Co. can’t meet demand forecasts, sources tell Bloomberg News.

Samsung has cut by 75% its original pledge to provide 20 gigawatt-hours of battery capacity (200,000 vehicles fitted with 100-kWh packs) per year after the companies couldn’t agree on production volume and timelines, Bloomberg says.

VW maintains that Samsung continues to be its battery cell supplier in Europe. Samsung declined to comment.

VW has predicted it will need more than 300 gigawatt-hours of battery capacity per year in Europe and Asia alone a decade from now. By then, the carmaker expects to have nearly 70 electric vehicles in its multi-brand model lineup.

VW also is working with two other South Korean battery makers—LG Chem and SK Innovation—in Europe. Contemporary Amperex Technology and SK Innovation will supply batteries to VW in China and North America, respectively.

VW also is partnering with Swedish startup Northvolt on a research program that could lead to a battery supply agreement. A decision is due later this year.

Battery supply constraints are viewed as a potential bottleneck for meeting industry growth targets for hybrid and electric vehicles in coming years. Panasonic, which has been struggling to meet demand for Tesla’s mass-market Model 3 electric sedan, also cautions that it may run short of batteries for the carmaker’s upcoming Model Y crossover vehicle.