Tesla has surely paved the way to a new understanding of electric vehicles, but its production is still very small, and limited to a narrow range of vehicle options. Mega-automakers like GM, Volkswagen, and Mercedes-Benz are preparing to compete with Tesla more directly by ramping up their battery supply lines and developing new models. Ben Foldy reports in The Wall Street Journal:
Auto makers are trying to control more of the supply chain for electric vehicles, forging new partnerships with raw materials producers and investing in facilities that make chemicals for batteries.
General Motors Co. GM +4.90% , Volkswagen AG VOW +3.77% and other major car companies have already been spending heavily on joint-venture factories to ensure their own supplies of electric-vehicle batteries. Now, they are also looking to expand further as they seek to lower costs, secure sought-after components and exert more control over battery quality and performance.
Tesla Inc. TSLA -3.90% was among the first to insource more of its EV-battery making, moves that helped the electric-vehicle pioneer become the world’s most valuable auto maker. The push by auto makers to control more of their supply chains also comes as a semiconductor shortage has hampered vehicle production.
In recent weeks, Volkswagen and Stellantis STLA +2.49% NV have announced deals to lock up supplies of lithium, the silvery-white metal whose electrochemical properties make it ideal for electric vehicles’ powerful batteries.
Lithium prices are rising as demand for the key ingredient in electric car batteries grows, amid a broader push to move away from oil and gas. But extraction of the metal is time consuming and potentially harmful to the environment, and plans to produce more have prompted protests. Photo: STR/Getty Images, Oliver Bunic/AFP/Getty Images
GM said in early December that it will invest in a new North American factory with Korean steel and chemical maker POSCO to produce cathode materials, a critical component of the battery that accounts for a big chunk of its cost.
Volkswagen has plans to build a similar cathode-material factory of its own with Belgian materials company Umicore SA UMICY -1.10% .
The moves point to an industry that is again embracing elements of vertical integration, a strategy that traces its roots to the early days of the auto industry when some manufacturers owned or acquired much of the supply chain necessary for production. Ford Motor Co. at one point owned mines and a steel mill.
Read more here.