Sources familiar with the news have stated that Germany’s automotive giant, Volkswagen is planning to make changes to its battery-buying plan which is around fifty billion euros due to the fact that one of its supply contracts, with Samsung, may fail.

Initially, Samsung agreed to provide batteries for more than twenty gigawatt hours, which is sufficient to power 200,000 vehicles with a hundred-kilowatt hour packs, before various opinions on manufacturing volume & schedule cropped up during detailed discussions. Later on, they decided to reduce supplies to less than five gigawatt hours.

Permission to huge amount of batteries to power an increasing number of e-vehicles has surfaced as a new issue for global vehicle makers in the midst of capacity restrictions, supply bottlenecks, & restricted access to raw materials. Manufacturing batteries that are safe to be used in the cars is far more complicated as compared to the technology utilized for consumer electronic gadgets such as smartphones.

Arndt Ellinghort, who is ISI analyst of Evercore said that the firm eventually requires three hundred gigawatt hours of annual battery cell supply & sans global multi-sourcing deals, it will be difficult. It is easy to discuss e-vehicle volume numbers, developing the essential value chain is a big challenge.

Volkswagen is investing around thirty billion euros on the market’s largest push into e-vehicles with a new line of completely battery-generated cars to challenge Tesla. The auto manufacturer’s electric ID3 hatchback will start their assembly lines later in 2019.

In a statement, Volkswagen said that Samsung is still their supplier for battery cell in Europe. As of now, Samsung has not commented anything.

Tesla, troubled by concerns related to demand & its capability to generate profit, in April blamed its supplier of battery, Panasonic, of being responsible for weak manufacturing rates of the economical Model 3.

At the start of May, Volkswagen defined a project to construct a domestic battery-cell factory in Germany along with Swedish startup Northvolt for around one billion euros with volume of 10 gigawatt hours. The firm is planning to announce its final decision sometime in 2019.

The firm has selected Samsung, LG Chem, and SK Innovation as their suppliers for battery for Europe together with Contemporary Amperex Technology for China.

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