Volkswagen’s View of What Soaring Energy Prices Mean for the Road

2022 Energy prices have soared, making it costly to heat homes and other indoor areas. With winter quickly approaching, many Europeans are bracing for a difficult season. According to German automotive giant Volkswagen, these energy costs are also severely impacting electric vehicle production on the continent.

Michael Davies, Founder of Green Econometrics breaks down all that goes into EV production and explains the reasons behind Volkswagen’s outlook:

“Hi, I’m Mike Davies. I’m an analyst with Green Econometrics. I’m here today to briefly talk about VW brand Chief Executive Officer Thomas Shaffer, discussing why EV production in the EU, and specifically in Germany, where VW has initiated groundbreaking for a battery production plant, Germany becomes unviable.

Simply put, it could just be posturing rhetoric. EVs are the largest energy and production transformation in history, EV production is extremely costly with investments in the billions of dollars. It’s complex. EV battery cell technology is nascent and somewhat elusive. There’s a lack of skilled labor and workforce.

There are supply chain constraints and limited battery material sourcing. Battery production is process intensive not to mention to scale the production from hundreds of thousands to tens of millions of batteries. There’s also the risk that the technology itself could change and become obsolete. The EU has limited battery production and negligible EV battery supply materials, so it makes the situation somewhat complex.

Also, EV battery production technology is changing with sodium ion battery approaches, VW has a lot on the table here. VW does have relationships with CATL, the largest battery producer in China, and has an investment in QuantumScape which is applying solid-state lithium metals for battery production.

VW should be recognized that they see that battery production is itself, gotta be vertically integrated and is of tremendous importance to their viability. Thanks.”

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