SEOUL -- Volkswagen plans to gradually switch the type of battery used in its electric vehicles, three sources with knowledge of the matter said on Monday, moving away from the technology supplied under current deals with South Korea's LG Energy Solution and SK Innovation.
VW plans to use the prismatic type of battery in its electric cars, increasingly turning to supplies from China's Contemporary Amperex Technology Co., South Korea's Money Today online news site reported earlier on Monday, citing unnamed South Korean battery industry sources.
CATL also supplies prismatic cells to Tesla Inc. LG Energy Solution, a unit of LG Chem, and SK have been manufacturing pouch-type batteries for Volkswagen, while CATL and Samsung SDI have supplied it with prismatic ones.
Volkswagen declined to comment. LG Energy Solution said it does not comment on market speculation, while SK Innovation declined to comment.
Volkswagen plans to announce its battery procurement plans at its Power Day event on Monday. VW Group CEO Herbert Diess sent out the invitation last week via Twitter and LinkedIn.
Boosting battery expertise and securing sufficient supplies will be vital for VW to deliver on plans for the industry’s biggest fleet of electric vehicles.
The German automaker intends to roughly double the share of its global sales that are purely battery-powered cars to between 6 and 8 percent in 2021 and narrow a volume gap with Tesla.
"It really depends on how fast Volkswagen manages to switch to prismatic-type batteries. Currently, there are not enough prismatic battery supplies, and it would take quite a while for Volkswagen to fully adopt them," sand Han Sang-won, an analyst at Daishin Securities.
"One of the reasons that Volkswagen has chosen to switch could be to enhance electric vehicles' safety, as prismatic batteries are generally considered to have lower energy density than pouch-type batteries, making them relatively safer," Han added.
Among the three types of batteries -- prismatic, pouch and cylindrical -- prismatic batteries had a 49% share of the EV battery market in 2020, while pouch-type batteries had 28%, according to industry tracker SNE Research.
The Korean battery makers have been locked in a legal battle in the United States over allegations of misappropriation of trade secrets related to EV battery technology.
Automotive News contributed to this report.
