Volkswagen warns that EV Battery Manufacturing is the Biggest Challenge in EU’s New plan for Combustion Engine Cars

    A senior Volkswagen official warned on Wednesday that producing enough batteries to power the necessary electric cars will be a more challenging problem than the EU plan to phase out combustion engine cars in just over 12 years.

    The declaration was made following early-morning Wednesday agreements among EU countries on draft laws to fight climate change, including one requiring that new cars sold in the EU begin generating zero CO2 by 2035.

    The European Commission first proposed the package last summer to decrease emissions that contribute to global warming this decade. The agreement struck last night, however, raises the possibility that the measure will become EU law.

    credit: reuters

    “It’s a challenging goal. We think it’s doable,” Volkswagen Chief Financial Officer Arno Antlitz told Reuters in an interview at the Reuters Automotive Europe conference on Wednesday.

    “The most challenging topic is not ramping up the car plants. The most challenging topic will be ramping up the battery supply chain.” Even while other automakers, such as Toyota (7203.T), are further behind in the race to produce EVs, they might have trouble achieving the goal.

    By the deadline, Volkswagen has said it will stop offering cars with internal combustion engines in the area. The Japanese carmaker opted not to respond on Wednesday

    Major automakers have been competing for battery cell supplies, but securing adequate raw materials for batteries may be more difficult. Lack of sufficient supplies of lithium, nickel, manganese, or cobalt might make it more expensive for EVs to be produced and put automakers’ profit margins at risk.

    credit: reuters

    The CEO of Stellantis, Carlos Tavares, predicted last month that the auto industry may see an EV battery shortage in 2024–2025 as manufacturers work to boost sales of electric vehicles while also building new battery plants. Despite Italy, Slovakia, and other states urging that the phase-out be delayed until 2040, an agreement was achieved in Luxembourg after more than 16 hours of discussion.

    Nations ultimately agreed on a compromise that kept the 2035 deadline but requested Brussels to evaluate in 2026 if hybrid vehicles could achieve the target. The 2035 plan could theoretically apply to any automobile technology, including hybrids and vehicles running on sustainable fuels, as long as the technology reduces carbon dioxide emissions from the vehicle. The Commission will assess hybrid car technologies in 2026 to see if they can achieve the 2035 goal.

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