VW To Reshuffle $58 Billion Battery Deal Over Samsung Supply Concerns

Volkswagen wants to modify its $56 billion battery-purchasing plan due to concerns that its supply deal with Samsung SDI could fall apart.

Bloomberg reports that Samsung reached an agreement with VW to supply in excess of 20 gigawatt hours of batteries to the German car manufacturer, enough to power 200,000 vehicles with 100 kWh battery packs. However, detailed negotiations between the two saw issues regarding production value and scheduling being raised.

Sources close to the talks report that the impasse caused Samsung reduce its commitment to less than 5 gigawatt hours.

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“VW ultimately needs 300 gigawatt hours of annual battery cell supply, and without robust global multi-sourcing contracts this will be impossible,” Evercore ISI analyst Arndt Ellinghorst said. “It’s one thing talking up electric vehicle volume numbers, building the necessary value chain remains a major challenge.”

In a statement, VW said that “Samsung continues to be our battery cell supplier for Europe,” while Samsung declined to comment on the most recent reports.

While the car manufacturer is making no secret of the fact that it needs to establish multi-billion-dollar battery supply contracts, it is reportedly making moves to reduce its reliance on Asian battery suppliers in the future. According to German publication Manager Magazin, VW is considering establishing a battery facility in western Germany with Korean battery cell manufacturer SK Innovation.

Volkswagen has a lucrative battery supply contract with LG Chem alongside its deal with Samsung SDI. The company is spending 30 billion euros on an electric vehicle push and, thus, it’s imperative that it establishes a supply chain capable of meeting its production targets.