Volkswagen, the world’s largest automaker is starting to make a determined foray into the EV market. The firm however is showing its interest in EVs with a bold step by securing long-term cobalt supplies from suppliers. Cobalt is an important component used in making the Lithium-ion battery that powers EVs and the group believes that it can get a strong foothold in the EV market if it is able to corner a significant part of cobalt supplies.
Volkswagen believes that securing a stable source of cobalt from producers will help it launch its fleet of 12 brands of electric vehicles. The firm wants to make an electric variant for each of the cars in its pipeline. For what it’s worth, presently; cobalt trades at $26 a pound.
Volkswagen electric vehicle recharging
Future Growth of Volkswagen Depends on Stable Source of Cobalt
Volkswagen is determined to forge a new ethical path in securing a stable source for an important material in the making of its EVs batteries, after learning its lessons from the scandalous ‘dieselgate’ of 2015. The company asked producers to submit proposals for a ten-year supply program, which will commence in 2019. The company wants all the tender concerning cobalt submitted before the end of September.
Moreover, according to a source, “The tender doesn’t actually tell you how much cobalt they want. They tell you how many EVs they want to make; you have to work out the cobalt content yourself,” the source, who is in the cobalt industry, was unable to determine the quantity that Volkswagen wants to store before it hits the market with massive numbers of EVs.
The analyst believes each battery would need between 8-12 kg of cobalt, which means to make three million vehicles; the auto giant will need between 24-36 million kg of cobalt yearly.
Zero Emission Vehicles to Challenges Tesla’s Authority in Electric Vehicle Market
Volkswagen shifts attention to electric vehicles after the controversial dieselgate scandals that rocked the company two years ago. VW’s plans to invest more than $24 billion or 20 billion Euros in the electric vehicle niche by 2030, to compete with Tesla Inc. (NASDAQ: TSLA), the pioneer company in the industry.
Analysts have observed that Volkswagen would need up to 150-gigawatt hours of battery capacity by 2025, for its fleet of electric vehicles across all the 12 brands of the company’s products. The procurement is setting new landmark as the largest in the auto industry, with the total package to be in excess of $59.76 billion.
Volkswagen Plans 3 Million Units of Electric Vehicles per Annum by 2025
Electric vehicle market is still at infancy stage, which makes it quiet, innovative, creative as well as lucrative, for automakers that are ready to take advantage of zero-emission policies that most developed nations of the world are taking.
Volkswagen is turning the heat on Tesla, which pioneer’s the electric vehicle industry, to maintain the fair share in the EV auto sector, Tesla must increase its output considerably, the market is getting bigger as EV is less than 3 percent of total vehicles sold globally in 2016.
Securing such a volume of cobalt is essential for VW’s projection of three million units of electric vehicles annually by 2025. Volkswagen has experience in volume car production because of its position as the number one automaker in the world. Tesla, however, is still struggling to meet up an ambitious 500,000 car annually projection. Tesla might soon find itself in the second position in the EV market in terms of volume because it simply can’t compete with Volkswagen in production speed.