Volkswagen partners with CATL for next generation EV battery

Volkswagen is doubling down on its commitment to the Chinese EV market. Abysmal sales figures show a decline in overall vehicle deliveries, but the German automaker is forging ahead with strategic partnerships and big investments. A key element of this strategy is a newly announced collaboration with CATL, the world's largest battery manufacturer.

The memorandum of understanding, signed between CATL and Volkswagen Group (China) Technology Co., Ltd., states that the two companies will work together to create "cost-competitive batteries," a crucial factor in making EVs more accessible to consumers.

According to the agreement, the two companies will develop battery swapping technology, which allows drivers to quickly exchange depleted batteries for fully charged ones. And finally, the partnership will look into battery recycling, an important step toward creating a sustainable and circular economy for EV batteries.

Alfonso Sancha, Executive Vice President of Volkswagen Group China, stated that the new initiative is a crucial part of the Group's "In China, For China" strategy. The agreement also extends to cooperation on raw material supply transparency and vehicle-to-grid (V2G) technology.

In 2024, Volkswagen delivered 2.9 million vehicles in China, a 10% decrease from the previous year. The SAIC-Volkswagen joint venture's ID. series of electric cars, consisting of the ID.3, ID.4, and the China-only ID.6, saw deliveries of over 130,000 units, a substantial 23.8% increase year-on-year. This makes the ID. series the best-selling joint venture EV series in China.

Unfortunately, plans for the ID.7 sedan were scrapped after disappointing sales figures for the FAW-VW joint venture's ID.7 Vizzion. Despite these setbacks, the company has invested heavily in the region, including a $2.77 billion investment announced last year and a $700 million stake in the EV startup Xpeng. Volkswagen has also launched a new Audi brand in China, which will produce China-only EVs based on SAIC's IM platform.

CATL is the world's leading battery supplier, and it plays a critical role in the electric vehicle industry. Its customer base includes major automakers like Tesla, BMW, Nio, Xpeng, Geely, and Mercedes-Benz, in addition to Volkswagen. In 2024, CATL's installed battery capacity in China grew by 47.2% to 246 GWh, giving it a commanding 45.5% market share.

Via