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Volkswagen says Tesla plant will jeopardize jobs in Germany

Engineering

Elon Musk, who is currently awaiting the opening of the first European Tesla Gigafactory in Grünheide, near Berlin, attended the Volkswagen top management meeting

Volkswagen says Tesla plant will jeopardize jobs in Germany

Volkswagen CEO Herbert Diess told workers to prepare for American electric vehicle maker Tesla to start ramping up production at its first European plant outside of Berlin next year.

The CEO is pushing to accelerate plans for a fundamental transformation of the company to prepare for the era of autonomous electric vehicles.

Addressing thousands of VW workers in Wolfsburg, Diess told them they needed to make the company “future-proof.”

Tesla at its Grünheide plant is aiming for a production time of just 10 hours per car, Diess said. VW's main EV plant in Zwickau currently requires more than 30 hours per vehicle, and should drop to 20 hours next year.

The CEO said the next VW Golf, the company's best-seller, shouldn't be made by Tesla or in China. "The next icon on the market should be made in Wolfsburg, VW's hometown," Diess tweeted.

New head of VW works council Daniela Cavallo urged Diess to focus on solving chronic chip shortages that VW suffers more than Tesla or BMW.

The lack of chips has forced VW to cut production in Wolfsburg to its lowest level in nearly 70 years.

The slowdown resulted in the delivery of 122,100 all-electric vehicles, including a small number of commercial vehicles, in the third quarter of 2021. Tesla produced 241,300 units over the same period.

VW, which owns Porsche, Audi, Skoda and SEAT, sold 231,600 battery-powered electric vehicles in 2020. That's less than half of Tesla's sales, but that's 214% more than the previous year. Rapid growth is expected to continue as Volkswagen launches 70 electric vehicles and opens six battery factories in Europe by the end of the decade.

The automaker's substantial investment in electric vehicles - € 35 billion ($ 41.7 billion) by 2025 - is focused on battery technology and further recycling as infrastructure for charging and recycling used batteries.

Scarcity of metals

Plans for both VW and Tesla could be thwarted by expected shortages of metals for batteries, namely nickel and lithium.

Musk expressed concern over nickel supplies. Last year, he pleaded with miners to produce more nickel, promising a "giant contract" to supply it efficiently and in an "environmentally friendly manner."

Last month, the electric vehicle giant signed a multi-year nickel supply agreement with New Caledonian-based Prony Resources. The contract guarantees the company about 42,000 tons of metal needed to make the batteries that power its electric vehicles.

Tesla also has a similar agreement with BHP.

VW is reportedly in talks with suppliers to ensure direct access to raw materials.

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