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Volkswagen wants to be the Samsung to Tesla’s Apple

“Let me start with the obvious: electric mobility has won the race,” said Herbert Diess, CEO of Volkswagen Group, on Monday. It is the only way to quickly eliminate mobility pollution.

This statement was given by Mr. Diess at a Volkswagen event, ‘Power Day’, at which the company announced its plans for beating and taking the No.1 position from Tesla Inc, the world’s largest maker of an electric vehicle. The key topic in the event was Electric Vehicles and the lithium-ion battery.

Batteries contribute to about 30% of the cost of an Electric Car. And the way forward in the EV space would on how to address this concern of the customers, to have access to convenient and faster battery charging.

Volkswagen announced that it will be setting up six battery factories across Europe by 2030, investing around $29 billion. It would also invest in creating facilities for recycling precious metals and improving battery design.

However, analyst Ben Kallo, at Robert W Bairdsay, said that Tesla will possibly continue to maintain its leadership in EVs. As per Mr.Venkat Vishwanathan, professor at Carnegie Mellon, Tesla drive trains are possibly more than 4-5 years ahead of the present competition. The Tesla cars provide a higher range for the same battery capacities. And Ellon Musk is not willing to concede his leadership position as yet. Volkswagen could, however, establish leadership in markets where Tesla has been non-existent. This would be similar to how Apple created a market for its smartphone. Tesla has designed its own battery chemistry, electric motors, and driver assistance system, and a charging system that others cannot use, similar to Apple. This may not be liked by some customers – like it is so for non-Apple users too.

Samsung and Google Android systems have developed an operating system that is different from Apple, and still attracts a lot of customers due to its features and ease of operations.

A non-Tesla electric vehicle ecosystem too would emerge, similar to the Android smartphone ecosystem.

On Monday, Baird’s Kallo concluded that Volkswagen too can be the Samsung of the Electric Vehicle world, but cannot be the Apple.

Lithium-ion batteries would be the major game changer for Volkswagen.

The company has invested in QuantumScape Corporation, a Silicon Valley startup, for developing solid-state batteries that are aimed to increase the driving range by up to 50% and at the same time minimize charging time to 15 minutes.

This is in spite of the fact that QuantumScape’s battery will be ready by 2025 only.

The two companies are now in parallel lanes on batteries, just as they are in the overall strategy.

Meanwhile, Tesla had announced plans last year that will see the cost of battery cells coming down by 56%. This will be through an efficiency push as also a series of technological improvements.

Volkswagen said Monday that it hopes to cell costs by half, by creating a one-size-fits-all format for most use cases.

James Frith, the Bloomberg NEF’s head of energy storage said that both companies have decided on a cell format that focuses on large economies of scale to reduce costs.


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