Volkswagen has faced technology development challenges due to issues with its subsidiary Cariad, while Porsche established the Cellforce subsidiary for battery production. Recently, Porsche acquired a 70% stake in Varta’s V4Drive division to leverage expertise in cylindrical lithium-ion batteries. These batteries offer advantages such as improved reliability and cost efficiency and will be integrated into future electric vehicles. Production is set to begin in Germany in April 2025, creating new jobs and supporting Varta’s restructuring efforts. Other brands like Audi and Volkswagen are also forming partnerships to enhance their technological capabilities.
In recent years, the Volkswagen group has experienced challenges in advancing certain technologies, primarily due to the struggles faced by its subsidiary, Cariad. In contrast, Porsche took a proactive approach by establishing the Cellforce subsidiary to focus on large-scale battery production. However, the anticipated production launch in 2024 has encountered delays, which could lead to potential setbacks.
Strategic Partnership Formation
In July 2024, Porsche initiated discussions with the battery manufacturer Varta, which has been facing its own difficulties. The aim was to acquire Varta’s V4Drive division, specializing in lithium-ion batteries for the automotive sector. This objective has now been realized, as confirmed by Porsche in a recent announcement. The company has become the majority stakeholder, owning 70% of the shares in this division, heralding significant changes for the future.
With Varta now holding only a minority interest and no operational control over the newly renamed V4Smart division, what does this mean for Porsche? The strategy behind this acquisition is to harness Varta’s expertise in battery design, particularly in cylindrical cells, known for their numerous advantages. This innovative technology is already utilized by Tesla in vehicles like the Cybertruck and Semi, as well as set to be adopted by BMW shortly.
Cylindrical batteries are recognized for their enhanced reliability compared to traditional cells, offering greater range and lower production costs. Their standardized design simplifies mass manufacturing, which effectively mitigates the risk of supply shortages and addresses the increasing demand for electric vehicles. Furthermore, these batteries exhibit remarkable shock resistance.
Equipped with built-in safety features and a compact size that promotes effective thermal management, they generate less heat, thereby minimizing wear and reducing fire hazards. Their adaptability allows them to be seamlessly integrated into various vehicle types. Overall, the benefits of this battery technology are substantial, illustrating why Porsche has shown keen interest in it for several years.
Manufacturing in Europe
Currently, Porsche is already implementing these batteries in select models, notably using V4Smart cells as boost cells in the 911 GTS, enhancing the vehicle’s performance. Looking ahead, these batteries will also power upcoming electric vehicles from the Stuttgart-based manufacturer, although it’s still uncertain which model will be the first to feature them. Porsche has announced that production will commence in Germany in April 2025 at the Nördlingen facility.
At present, battery production is limited to the Ellwangen site, but this expansion is expected to generate around 375 new jobs and will include many hires from Varta, providing a much-needed boost to the company as it navigates challenging times. Porsche will continue to invest in Varta, increasing its involvement with the group. Nevertheless, this initiative, aimed at supporting the restructuring of Varta, is still unfolding and remains in progress.
Porsche is not alone in seeking external partnerships to expedite its technological advancements. Audi has also engaged with IM Motors, while Volkswagen has formed a joint venture with the Chinese brand Xpeng and is collaborating with the American firm Rivian. The overarching goal is to catch up and maintain competitiveness, particularly against the swift rise of Chinese brands like BYD.