Volkswagen announces strategic cooperation with CATL to develop batteries in China jointly

Volkswagen Group China signed a strategic cooperation MoU with Chinese battery giant CATL. The automotive heavyweights will jointly develop “cost-competitive batteries,” battery swapping, and explore battery recycling.

“By deepening cooperation with CATL, we will create high-performance, cost-effective battery solutions. Our core task is building a strong local supply system. This is also a crucial part of the Group’s In China, For China strategy”, said Alfonso Sancha, Executive Vice President, Volkswagen Group China

The strategic cooperation was signed between CATL and Volkswagen Group (China) Technology Co., Ltd., a subsidiary of Volkswagen Group (China) and VW’s Chinese joint ventures SAIC-VW, FAW-VW and Volkswagen Anhui (JAC), the German automaker announced on Weibo today.

Both companies also agreed to cooperate in the field of raw materials supply transparency and V2G (vehicles-to-grid) technology.

Volkswagen Group delivered 2.9 million vehicles in China in 2024, down 10% from 2023. SAIC-Volkswagen’s ID. was China’s best-selling joint venture EV series in 2024, with more than 130,000 delivered units, up 23.8% year-on-year.

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The series currently consists of ID.3, ID.4 X, and China-only ID.6 X. SAIC-Volkswagen announced it would launch an ID.7 S sedan in early 2024; however, after seeing the disappointing sales of the FAW-VW venture, they scrapped the plans. It was a good decision, as FAW-VW sold only nine units of ID.7 Vizzion in January.

Volkswagen is facing decreasing sales in the biggest car market in the world. Despite being the best-selling EV JV, Volkswagen’s electric cars are not very popular among Chinese buyers. However, the company decided to double down on China to make clear it doesn’t plan to give up.

In April last year, VW announced a 2.5 billion EUR investment in China. A year before, the company purchased a stake in EV startup Xpeng for 700 million USD. Volkswagen Group launched a new brand called Audi in China without the signature four-ring logo. Audi will produce China-only EVs based on SAIC’s IM platform. Volkswagen also plans to launch two cars based on Xpeng’s EV platform.

Volkswagen Group is CATL’s customer, along with Tesla, BMW, Nio, Xpeng, Geely, Mercedes-Benz, and others. CATL is the biggest battery supplier in China and worldwide.

In 2024, CATL grew 47.2% to 246 GWh installed battery capacity in China, having a 45.5% market share.