Tuesday, May 28, 2019

"Volkswagen to Reshuffle $56bn Battery Push as Samsung Deal at Risk"

From Bloomberg, May 26:
  • VW ultimately needs 300-gigawatt hours of annual battery cell supply and without robust global multi-sourcing contracts.
  • Tesla, beset by concerns over demand and its ability to make a profit, last month accused its battery supplier.
  • Samsung and SK Innovation Co. as battery suppliers for Europe along with Contemporary Amperex Technology Co. for China.Volkswagen AG is making changes to its battery-purchasing plan worth about 50bn euros ($56bn) over concerns that one of its supply deals, with Samsung SDI Co. Ltd., might unravel, according to people familiar with the matter.
Samsung initially agreed to deliver batteries for just over 20 gigawatt hours, enough to power 200,000 cars with 100-kilowatt hour packs, before different views on production volume and schedule emerged during detailed negotiations, said the people, who asked not to be identified as the talks are confidential. The impasse cut pledged supplies to less than 5 gigawatt hours, they said.

Access to vast amounts of batteries to power a growing number of electric vehicles has emerged as a new battleground for global automakers amid capacity constraints, supply bottlenecks and limited access to raw materials. Producing batteries safe to use in cars is more complex than the technology used for consumer electronic devices like smartphones.

“VW ultimately needs 300 gigawatt hours of annual battery cell supply and without robust global multi-sourcing contracts this will be impossible,” Evercore ISI analyst Arndt Ellinghorst said. “It’s one thing talking up electric vehicle volume numbers, building the necessary value chain remains a major challenge.”

Shares of Samsung SDI dropped as much as 4.9 percent in early trading on Tuesday in Seoul, their biggest intraday decline in more than two weeks. They were down 1.9 percent as of 9:21 a.m. local time....MUCH MORE