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Volkswagen is playing a big game of chess.
Jul 2,2020 08:26CST
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The content below was translated by Tencent automatically for reference.

SMM News: many years later, Feng Sihan, CEO of Volkswagen China, and Li Kun, chairman of Guoxuan Hi-Tech, will often recall the night when the two sides signed the contract in Beijing on May 28th, 2020.

A seemingly unexpected cross-border hand-in-hand is just a chess game in which the giant wants to continue to walk in front of everyone a hundred years later.

It is imperative to win

The giant turned around, thunderous.

In the past two or three years, Volkswagen spent a lot of money on purchasing power batteries from Ningde era, LG Chemical and SKI, while seeking to control the voice of core components in the form of shareholding and joint venture factories. So far, Volkswagen has signed orders for more than $40 billion (276.7 billion yuan) with battery suppliers, and direct investment in power batteries has reached 17.83 billion yuan.

"it is as urgent as the law." In the last month or so, Volkswagen spent more than 10 billion yuan to scold Fang. Volkswagen will increase its investment in QuantumScape by $200 million (1.42 billion yuan), it said on June 16. Volkswagen signed a strategic agreement with Guoxuan Tech on May 28, under which Volkswagen will invest about 1.1 billion euros (8.72 billion yuan) to acquire a 26.47 percent stake in the latter and become its largest shareholder.

Volkswagen's intention to control the core voice of the power battery is becoming more and more urgent and imperative.

A hundred years of good luck

Behind the attack in all directions, Volkswagen is facing the strong rise of the "new power of building cars" and the "ten-sided ambush" under the pressure of carbon emissions.

More than a decade ago, Tesla was an unknown start-up. However, the stars have changed. Today, Tesla's global sales of electric vehicles have exceeded 1 million, and its total market capitalization has exceeded 200 billion US dollars, surpassing Toyota (180 billion US dollars) and Volkswagen to become the first in the world.

At the same time, according to the latest EU environmental standards, the European auto industry will be fined up to 34 billion euros by regulators in 2020 for failing to meet emission standards. Europe's top 13 automakers will be saddled with a fine of 14.5 billion euros (111.1 billion yuan). Among them, Volkswagen may be fined as much as 4.5 billion euros (34.5 billion yuan) for its high sales in Europe.

The German government even announced that it would stop the production of fuel cars from 2025.

With the strict implementation of the EU carbon emissions bill, and European countries to strengthen the policy promotion of new energy vehicles, "Enwei" under the mainstream car companies to accelerate the transformation to new energy. As one of the largest car companies in the world, Volkswagen began to "turn around" under the sweeping wave of new energy.

To this end, Volkswagen has formulated a new energy vehicle plan that can be called "the proudest in history". Volkswagen plans to invest 33 billion euros (263.4 billion yuan) in developing new electric and hybrid vehicles by 2024 and plans to be carbon neutral in the global market by 2050.

According to Volkswagen's global electrification strategy released at the end of 2019, Volkswagen will launch nearly 75 electric models worldwide in the next decade, and its planned sales are expected to reach 26 million by 2029, including 20 million pure electric vehicles based on the MEB platform and 6 million high-end electric vehicles on the PPE platform.

Volkswagen attaches great importance to China, the world's largest auto market. According to the plan, Volkswagen plans to deliver about 1.5 million new energy vehicles to Chinese consumers by 2025. Volkswagen, Audi, Skoda and Seattle are expected to release 27 models based on the MEB platform by the end of 2022.

Volkswagen has seen clearly that whether the electrified transformation is successful or not has a bearing on the company's luck in the next hundred years.

Horse racing enclosure

It is obvious that the key to the implementation of the huge electrification strategic plan is the power battery. In terms of battery demand, in the Asian market alone, Volkswagen's demand for batteries will increase to 150 GWH per year from 2025, exceeding the current total installed capacity of electric vehicles by all car companies in the world. For this core component known as the heart of electric vehicles, Volkswagen has a long-term and comprehensive forward-looking layout, and its vision extends to 50 years or even a hundred years later.

"now we have to spend a lot of money to first occupy the market, race the land, and then constantly adjust according to the strategic layout, combined with our own supply chain system, gradually weave a big net; Volkswagen is playing a huge game of chess, what is the outcome? it will take time to verify." Zhou Bo, director of the research department of the Power Battery Application Branch, said.

In terms of style, Volkswagen is a typical pro-tech. From many perspectives, solid-state battery is recognized by the industry as a subversive next-generation battery technology. Global auto companies BMW, Daimler, Toyota, Hyundai, GM and other giants are actively layout. Volkswagen is naturally very optimistic about the development prospect of solid-state batteries. According to Volkswagen Group's plan, it will set up a mass production line for solid-state batteries in 2025.

There is no doubt that Volkswagen, a car giant of this size, must participate in the complete value industry chain of power battery production in order to ensure its long-term core advantages. And Volkswagen naturally spares no effort to control the supply of raw materials upstream. In April 2019, Volkswagen signed a Memorandum of Strategic Cooperation with Ganfeng Lithium, which will supply lithium chemical products to Volkswagen and its suppliers over the next 10 years.

Of course, in addition to stabilizing the supply of raw materials, Volkswagen's home-made battery strategy is also moving forward in an orderly manner. In June 2019, Volkswagen announced that it would invest 900 million euros (about 7 billion yuan) in battery research and development with European lithium battery company Northvolt, and build a new battery factory in Germany, with an initial planned capacity of 16 GWh, which will be put into production around 2024. In September of the same year, Volkswagen opened a power battery test production line with a total investment of 1 billion euros in Salzjit, Germany.

In addition, even at the end of the power battery industry chain, Volkswagen is accelerating its layout. Volkswagen built a new power battery recycling plant in Salzgit in March 2019 and plans to recycle 1200 tons of lithium batteries for electric vehicles each year from 2020.

However, if we look at Volkswagen's layout in the field of power batteries, no matter whether we purchase batteries on a large scale, invest in solid-state batteries, build a factory in cooperation with Northvolt, or set up a battery recycling plant, although it is comprehensive and step by step, it always gives people the impression that it lacks a bit of aggressiveness.

In contrast, competitors Tesla and BYD, the two new energy pioneers with Panasonic (super factory) and Fudi batteries, have a powerful electrified posture. It is clear that Volkswagen needs a valiant and powerful force too much; it is imperative to cultivate battery suppliers in the system.

A perfect match

Years later, Feng Sihan, CEO of Volkswagen China, and Li Kun, chairman of Guoxuan Hi-Tech, will often recall the spring night when the two sides signed the contract in Beijing on May 28, 2020.

It is precisely because of this joint effort that the future fate of Volkswagen and Guoxuan Hi-Tech has been profoundly rewritten, and great changes will take place in the new energy vehicle market in China and even around the world.

When people focus on Guoxuan Hi-Tech, a low-key Chinese power battery company, some people may admire Volkswagen's unique vision, or some will lament that Volkswagen has to. But again and again, Guoxuan Hi-Tech was the best choice for the public at that time.

"the requirements and vigilance of the mainframe factory to control the core components have never disappeared, and the Volkswagen Group is extremely determined in the electrification transformation among multinational companies, so it is necessary to take the power battery in its own hands." This is how Volkswagen confessed its strategy. This is the starting point and foothold of the public.

Throughout the world, Japan and South Korea Panasonic, LG Chemical, SKI, Samsung SDI although the technical strength is good, but either already famous flowers have owners, or the strength is too strong to control, are not easy for the public to get their hands on. Moreover, the most comprehensive power battery industry chain in the world is in China, which is an advantage that Japanese and Korean enterprises do not have.

In terms of Chinese companies, Ningde era and BYD are high-quality targets, but it is almost impossible for any single car company to control. Apart from the two heroes, Guoxuan Hi-Tech stands out from the crowd.

In terms of market share, Guoxuan Hi-Tech is the top three battery manufacturer in China in recent years. According to the statistics of Power Battery Application Branch, the installed capacity of power battery in 2019 is about 3.31GWh. second only to Ningde era and BYD. In addition, Guoxuan Hi-Tech has an existing lithium iron phosphate battery capacity of 17GWhh and a ternary production capacity of 5GWh.There are plans to increase the capacity of 16GWh batteries (expected to be completed in 2023) and 30,000 tons of high-nickel ternary cathode materials.

From a technical point of view, Guoxuan Hi-Tech has always been the global leader in lithium iron phosphate batteries. In 2019, its cell energy density has exceeded 190 Whplash kg, and the system energy density of a number of passenger models has exceeded 140 Whhand kg. With the continuous improvement of performance, lithium iron phosphate continues to attack the city and pull out the stockade in the field of passenger cars, such as BAIC EC3, Changan Auchan, Keshan, Wuling MINI and so on. In addition, Guoxuan Tech also has good technical strength in the field of ternary batteries. The energy density of the ternary VDA cell reaches 230 HV / kg, and the soft package ternary cell with the energy density of 302Wh/kg has been developed.

It is worth noting that the vertical industrial chain integration advantage of Guoxuan Hi-Tech is obvious. The company actively distributes nickel, cobalt and lithium resources-the four major materials for battery-cell and PACK upstream and downstream resources, among which subsidiary precision coating has been mass-produced carbon-coated aluminum foil, cooperation with China Metallurgical Group to develop ternary precursor materials, joint venture with Xingyuan material for diaphragm development, cooperation with Tongling Nonferrous for copper foil development, joint venture with Shanghai Electric to enter the field of energy storage, etc. From materials to supporting products, the integration of the upstream and downstream of the industrial chain is realized, and the cost advantage superimposed scale effect is realized.

The era of struggle for hegemony begins

After the perfect match between Volkswagen and Guoxuan Hi-Tech, the substantial impact will be revealed soon.

For Guoxuan Hi-Tech, it is more like having its own armored vehicle, and its combat effectiveness will naturally increase exponentially, and its position of tripartite confrontation with Ningde era and BYD will be more consolidated in the future. According to Volkswagen, Ningde Times is the main battery supplier for Volkswagen's first batch of products based on the MEB platform in China, and Guoxuan Tech will play an important role in the battery supply of subsequent products on this platform.

Soochow Securities analysis predicts that Guoxuan Hi-Tech will continue to maintain its competitive advantage of lithium iron phosphate while generating ternary batteries. Volkswagen will help Guoxuan Hi-Tech reorganize its production system and strengthen its R & D strength. Follow-up will benefit from the increase in mass procurement, battery shipments will return to a high growth.

At present, Guoxuan Hi-Tech's customers are mainly BAIC, SAIC, Jianghuai, Changan, Geely and other domestic auto companies, while the cooperation with Volkswagen has directly jumped to the international first-class automotive suppliers, whether it is the power battery demand provided by Volkswagen itself, or the company continues to expand its overseas supply chain on this basis, it will bring enough imagination space for the performance growth of Guoxuan Hi-Tech.

For Volkswagen, the battery supply will be further effectively guaranteed. Bohai Securities estimates that Volkswagen needs 34.8GWh power battery supply in the Chinese market every year after full production, based on the production capacity of the two MEB plants built by Volkswagen in China. There is no doubt that with the addition of Guoxuan Hi-Tech, Volkswagen can not only effectively alleviate the tension of power battery supply, but also reduce the concentration of power battery supply chain and enhance the bargaining power of the company in the industrial chain.

From the perspective of the global new energy vehicle market, Volkswagen, which finally has its own force, will be more confident and able to compete with Tesla, BYD, BMW, Daimler, Toyota, Hyundai, GM and other giants in the sha in the future. A new era of princes' struggle for hegemony has begun.

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