News reports suggest that Volkswagen may be set to delay plans to raise outside investment in its battery subsidiary PowerCo.

News reports suggest that Volkswagen may be set to delay plans to raise outside investment in its battery subsidiary PowerCo, while waiting for market conditions to improve. The delay is largely in response to stuttering European EV sales penetration that has remained flat in 2023.

Previously announced plans suggest that Volkswagen is committed to investing 20 billion euros (US$) in battery plants to produce batteries for 3 million EVs per year. Three plants are currently under construction in Germany, Spain and Canada with production slated to start in 2025. Renault recently announced that it was also delaying its plans for an IPO for its EV division Ampere, that was scheduled for H1 2024.

Project Blue’s provisional 2023 EV penetration rates show a stagnating European market, where battery and plug-in-hybrid penetration rates remained at 19% year-on-year. While there was growth in European sales of full-battery EV versus plug-ins, the overall share of the automotive market hasn’t shifted in 2023, largely a result of EV subsidies and tax incentives beginning to fall away in key markets.

EV growth requires significant investment across the entire supply chain, and in battery production in particular. With market conditions promising a more favourable outlook towards the end of 2024, the overall build-out of EV and battery capacity is likely to stall across western markets in H1 2024. European OEMs in particular will require new impetus to re-engage with ambitious 2030-35 targets, with a risk that the current EV build-out will stagnate and the required economies of scale with fail to materialise in the short to medium term.