The batteries are forcing the car industry into new collaborations


The internal combustion engine has been the eye of the car companies, but with the battery they think completely differently – at least right now. Vehicle researchers have partly different opinions on why this is so.

Car manufacturers have historically often been very proud of their self-developed engine technologies. The name often adorns the tailgate or engine cover, although the interest of the average customer is probably moderate. Honda Vtec is one example, Volkswagen TDI and Mazda Skyactiv-X two more.

But now the internal combustion engine is being passed. Vehicle manufacturers are reorganizing their development departments. Electric cars do not require advanced mechanical wonders in the form of injection systems, valve control or turbochargers. In electric cars, the engine is not the single most expensive component, but the battery. It accounts for about 40 percent of the cost of the entire car. In this year’s edition of Elbilskampen, Ny Teknik has therefore mapped the car companies’ battery strategies.

Here is the technology choice that the electric car manufacturers share (Elbilskampen 2019)

How car manufacturers want to catch up with Tesla (Elbilskampen 2018)

The big electric car battle has begun (Electric car battle 2017)

70 percent of the battery is raw material cost

To top it all, the battery cost consists of about 70 percent of raw materials such as cobalt, lithium, manganese and copper. It is essentially different from an internal combustion engine that mostly requires cheap steel and iron or aluminum – but which has been machined and joined with incredible precision. Battery development, on the other hand, is a matter of chemistry, not mechanics.

Given the elevated position the internal combustion engine has previously had with the car companies, one may ask why so few of them have chosen to build up their own production of the component that is the key to the electric car’s success – the battery cell.

– I think the simple answer is that they are busy handling two parallel systems, petrol and diesel cars and electric cars, respectively, says Martin Sköld, vehicle researcher and associate professor at the Stockholm School of Economics.

– The technology behind the batteries is also not something that has formed the core of the vehicle companies. They cannot easily build on existing knowledge. Plus, in the name of honesty, you can actually see batteries as one commodity (merchandise, editor’s note), he continues.

Lack of aftermarket a cause?

As Ny Teknik’s survey shows, the electric car battle, most car companies choose to buy the cells from an external supplier. Some build their own factories in collaboration with existing cell manufacturers. Only Tesla currently intends to start up large-scale own production.

Mikael Wickelgren, vehicle researcher and senior lecturer in business administration at the University of Skövde, points out, just like Martin Sköld, that the battery can be considered a standard component like any other. And that car companies probably think that others can handle the production of them better than they themselves can.

But he also puts forward another aspect that makes a significant difference between batteries and internal combustion engines.

– The internal combustion engine also contains a large part of the future opportunities for revenue in the aftermarket business. In plain text: profitability usually lies in servicing cars once they are sold to customers. If you have manufactured the internal combustion engine that is in the car, you as the manufacturer receive the income from the spare and wear parts that the engine requires in the service stage during the car’s life, he writes in an email to Ny Teknik and adds that batteries hardly give rise to anything positive cash flow in the aftermarket.

“Vehicle companies have enough challenges”

Martin Sköld agrees that the battery’s changed aftermarket is certainly an influencing factor. But he believes that it is more about the fact that research and production on batteries needs to be run by companies that specialize in just that.

– The vehicle companies have enough challenges as it is. A new car model can consist of hundreds of different development projects and involve as many subcontractors. It’s a giant device. To then take on another challenge that lies outside the core business becomes too much in this context, he says.

Can the car companies’ attitude to their own cell production change if electric cars completely dominate sales in the future?

– Yes, I think so. But the important thing is to ensure the availability of batteries. Then you know at what pace you can launch new models. But the really important issues are on another level. They are more about how to own the customer and make them like the experience with the car, he says.

Northvolt has Volkswagen, BMW and the truck manufacturer Scania as customers. All three are also investors, but VW has pulled its involvement absolutely farthest and taken a 20% ownership position. The two will also jointly build a cell factory in German Salzgitter. Communications Manager Jesper Wigardt states that it varies how deep cooperation customers want.

– With VW, we have a partnership around building and operating the German factory together, but then we have partnerships with other manufacturers that are more traditionally designed for the development and purchase of battery cells. Both VW, BMW and Scania are both investors and buyers, he writes in an email response to Ny Teknik.

Vertical integration hot

Although the concept of vertical integration is currently hot in the automotive industry, ie the opposite of locating component manufacturing with subcontractors, the clearest trend regarding electric car batteries is rather cooperation.

The information publisher Wolters Kluwer sums it up well in a blog post: “Traditional car manufacturers had the time and money to vertically integrate and build their own internal combustion engines, but the lack of expertise and investment costs for the production of lithium-ion batteries has forced them into electric car-related collaborations.”

However, Wolters Kluwer believes that the future may look different for car companies. As battery expertise grows, they may want to reduce their dependence on battery suppliers in favor of security of supply and cost savings: “Therefore, we may see car manufacturers buy small but specialized companies focused on battery technology and manufacturing instead of forming joint ventures with battery giants,” he writes. the author.

Regardless of what future battery production looks like, we can probably be sure that it will not look the same as today.

They interviewed

Martin Sköld, vehicle researcher and associate professor at the Stockholm School of Economics. Has written the book Double effective, which among other things is about how Scania managed to combine large product variation with high volume, thanks to a modular system.

Mikael Wickelgren, vehicle researcher and associate professor of business administration at the University of Skövde. Is co-author of the book Volvo in our hearts (2011) which deals with the passenger car manufacturer’s development and identity crisis.

Jesper Wigardt, communications manager at the battery manufacturer Northvolt, which was founded as late as 2016. He previously had the same title for the payment giant Klarna.


Source: Nyteknik – Senaste nytt by www.nyteknik.se.

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