Volkswagen is revamping its lineup of electric cars, with models like the ID. Polo placing price positioning at the heart of the strategy. To achieve this, the company is betting on lithium iron phosphate batteries, or LFP. VW has also strengthened its partnership with the Chinese firm Gotion, aiming at three joint ventures.
Volkswagen accelerates on the technology LFP
Lithium-iron-phosphate batteries have long been shunned by European automakers, while Chinese manufacturers have used them for affordable models. But VW is shifting the paradigm and has been using LFP batteries for several months now. It began with the restyled Cupra Born equipped with a 58 kWh LFP battery, and this chemistry has since spread across most models sharing the same platform, such as the ID.3 Neo or even the Ford Explorer and Capri, which also ride on the MEB platform.
With the arrival of the MEB+ platform and models like ID. Polo, ID. Cross, Cupra Raval, and Skoda Epiq, these are entry-level 37 kWh batteries adopting LFP chemistry. But Volkswagen wants to go even further by opening three sites for LFP battery production, including two in Europe, through a joint venture with the Chinese specialist Gotion.
Three sites for the batteries LFP
It’s through its PowerCo subsidiary that the German group Volkswagen is moving closer to the Chinese company Gotion. The objective is to implement three joint ventures dedicated to LFP battery production. The projects span the Valencia region in Spain, Šurany in Slovakia, and Kenitra in Morocco.
In detail, PowerCo of Volkswagen will hold 51% of the Valencia stake, while Gotion will invest €1.1 billion to acquire the remaining 49%. This site is expected to become one of Europe’s main centers for producing the “Unified Cell” for VW’s LFP batteries. It is a strategic choice located near the plants producing the VW ID. Polo and Cupra Raval in Martorell and the Skoda Epiq and VW ID. Cross in Pamplona.
In Slovakia, the arrangement is reversed with 51% stakes going to Gotion. This site will manufacture cells for vehicle batteries as well as for stationary energy storage. Finally, in Morocco, the aim is to produce the active materials for the cathodes destined for LFP cells.
In these latter two projects, Volkswagen must invest a total of €470 million to obtain 49% stakes in each site.
A project of scale but essential for the future
According to information released by Volkswagen, LFP batteries currently account for 10% of the market, but they could equip 60% of electric vehicles sold by 2030. Therefore, it is crucial for the automaker to position itself in this segment.
And the figures underscore the ambition: the Valencia plant is projected to reach an annual production capacity of 29.1 GWh, which corresponds to roughly 790,000 ID. Polo vehicles with the 37 kWh battery, which is an LFP pack. It’s a significant figure, but still well below the 40 GWh target set at the project’s 2023 launch by PowerCo. The Slovakia plant should compensate somewhat with a capacity of 8.4 GWh per year. Meanwhile, the Moroccan site is slated to produce 100,000 tonnes of LFP cathode material per year to supply the Spanish and Slovak alliance plants. By combining these projects with PowerCo plants in Salzgitter, Germany, and St. Thomas, Canada, the total annual production could reach 200 GWh.
These investments should benefit consumers, because LFP batteries are cheaper than NMC (nickel-manganese-cobalt) batteries, which are widely used by European EVs. And given that a car battery can still account for about 40% of the vehicle’s total price, using cheaper cell chemistry could have a positive impact on the prices of new cars.
