The Small Spark Ignited by the LG-SK Lawsuit... Volkswagen Accelerates Battery Internalization

Unified to Prismatic Batteries from 2023
Establishing 240GWh Battery Factory by 2030... Twice LG's Production Capacity
Setback for K-Batteries Dominated by Pouch Type

[Asia Economy Reporter Hwang Yoon-joo] Volkswagen Group, the world's second-largest automaker, announced that it will introduce 'prismatic batteries' starting in 2023. Along with this, it declared plans to build six battery factories in Europe by 2030. Interpreted as Volkswagen, influenced by the battery trade secret infringement lawsuits involving LG Energy Solution and SK Innovation, shifting future battery supplies to China?where there is no litigation risk?and ultimately moving toward battery internalization.

According to industry sources on the 16th, Volkswagen held a 'Power Day' event the previous day and announced that it will establish battery factories with partners to produce a total of 240 GWh annually by 2030. This scale is twice the electric vehicle battery production capacity (120 GWh) of LG Energy Solution as of last year. They plan to produce 40 GWh each in six regions within Europe, starting mass production in 2023 and 2025 at Skellefte?, Sweden, and Salzgitter, Germany, respectively.

Prior to this, Volkswagen also announced that it will switch from the existing pouch-type batteries to integrated prismatic batteries by 2023. This is a strategic move toward solid-state batteries in the long term.

There are various interpretations behind Volkswagen's choice of prismatic batteries. First, it is considered to take into account the Chinese electric vehicle market. Volkswagen is the first global automaker to enter the Chinese market and generates 40% of its sales from China. Since CATL, a Chinese electric vehicle battery company, primarily produces prismatic batteries, this is seen as a consideration of the Chinese market.

Additionally, Volkswagen's collaboration with Swedish battery company Northvolt to establish a battery cell factory is also believed to have influenced this decision. Northvolt focuses mainly on prismatic batteries.

Some analysts suggest that concerns over litigation risks involving LG Energy Solution and SK Innovation may have also influenced this decision. Due to the lawsuits between the two companies, Volkswagen will need to find other battery suppliers instead of SK Innovation starting two years from now.

An industry insider in the electric vehicle battery sector said, "Since both CATL and Northvolt use prismatic batteries, it was natural to consider standardizing on prismatic types," adding, "Volkswagen has effectively vetoed pouch-type batteries."

The domestic battery industry is closely watching Volkswagen's decision. Both LG Energy Solution and SK Innovation supply pouch-type batteries to Volkswagen. In particular, LG Energy Solution produced 100 GWh of pouch-type batteries out of 120 GWh total battery production last year, and SK Innovation produces only pouch-type batteries.

According to energy market research firm SNE Research, last year, prismatic batteries accounted for 70.8 GWh (gigawatt-hours) of global electric vehicle (EV, PHEV) batteries, making up 49.2% of the total, the largest share. The proportion of prismatic batteries decreased by 7.6 percentage points compared to the previous year.

Pouch-type batteries, centered on LG Energy Solution and SK Innovation, accounted for 40.0 GWh, or 27.8% of the total, while cylindrical batteries made up 23.0% (33.2 GWh).

An industry official explained, "Volkswagen's establishment of a battery joint venture is a decision to secure batteries in response to the rapid growth of the electric vehicle market, similar to Tesla," adding, "Also, to dominate the electric vehicle market, price competitiveness is important, and this means they intend to go with a single type of integrated cell to reduce battery costs."

This content was produced with the assistance of AI translation services.