Volkswagen is looking at making its own batteries in North America

VOLKSWAGEN (VW) is considering setting up an in-house battery cell manufacturing operation in North America, similar to what it's doing in Germany.

The goal would be to ease a coming battery shortage by supplementing suppliers with its own production, according to Johan De Nysschen, chief operating officer of Volkswagen of America. The board is still weighing the idea, and no final decision has been made.

Vertical integration "has to be on our consideration of strategic options", De Nysschen said Wednesday (Jun 8) in an interview at VW's new battery testing lab in Chattanooga, Tennessee.

The company has been scouting for US battery plant sites and should make a decision by the end of 2022, a spokesperson said. VW is considering building its own cell-production facility, using third-party suppliers or entering into joint ventures.

Automakers from VW to General Motors are exploring different business models as they race to electrify their lineups and catch Tesla, the world's No 1 seller of electric vehicles (EV). They're forging partnerships with battery cell makers and mining companies as they try to secure materials and know-how.

VW already operates a battery pilot line and recycling facility in Salzgitter, Germany, and plans to erect a full-scale factory to produce cells there starting in 2025, part of a US$2.3 billion battery hub in Germany. VW has also created a dedicated company for its battery business, called PowerCO.

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The carmaker has invested US$800 million to retool the Chattanooga assembly plant to make EVs, and a new US$22 million testing lab, which it opened to reporters and local officials at an event Wednesday. It has also built a battery-pack assembly plant next to the assembly facility.

The company, whose main brand swung to profitability in the US last year, is working to boost market share in the region, where it has long struggled due to a lack of popular SUV models in its lineup. In March, VW earmarked US$7.1 billion over the next 5 years to improve its US offering, battery research and manufacturing capabilities. BLOOMBERG