Audi Close to Solidifying EV Battery Deal With China's BYD, Report

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【Summary】BYD Co. is looking for lithium-ion batteries for its electric vehicles and the Chinese company is currently negotiating a deal with Audi.

Original Vineeth Joel Patel    Oct 15, 2019 6:00 AM PT
Audi Close to Solidifying EV Battery Deal With China's BYD, Report

Developing electric platforms, producing batteries in house, and all of the other necessities to bring an all-new electric car to market is proving to be expensive endeavors for brands. It's why a lot of companies have partnered with one another in the hopes of trying to bring costs down. Things are a lot cheaper if you can share some of the development costs. That's exactly what China's BYD Co. is looking to do with an unlikely partner.

BYD, Audi Working On Battery Deal
BYD Co. is China's largest company when it comes to electric-vehicle manufacturing and is the country's second-best automotive battery supplier. Up until recently, the company has been focusing on producing batteries for its own vehicles. But, according to a report by Bloomberg, Audi, one of Volkswagen's luxury brands, is currently working out a deal with BYD. Citing unnamed sources, the outlet claims that Audi could add BYD as its supplier of batteries for its EVs.
The sources state that negotiations are in an "advanced stage," though BYD is reportedly speaking with other automakers about a similar battery deal. For Audi, the deal would see batteries from BYD be used for the German automaker's Premium Platform Electric architecture. The first models could be on the road as soon as 2021.
Audi, similar to BYD, is also speaking with other companies for a battery deal. The two companies have also discussed the possibility of a joint development venture of Audi purchasing a stake in BYD's battery arm. The sources declined to provide any information on how those talks are progressing.

Audi Wants A Partner In China
As Bloomberg points out, the decision for Audi to partner with BYD for batteries is more than just an effort to help with the high development costs of EVs, but it also comes down to diversifying supplies of important components. China will play a crucial role for Volkswagen and its subsidiaries in the future, as the company plans to deliver 22 million battery-powered cars by 2028. The majority of those, the outlet claims half, will be built in China. With production of vehicles set in that part of the world, it makes sense to partner with BYD, which calls China home.
While Audi will get BYD's batteries, the Chinese company will solidify its place at the top of the heap. Another major Chinese battery manufacturer is CATL, which also happens to specialize in lithium-ion batteries for EVs. Unlike BYD, which just recently started to look for large automakers to partner with, CATL has already struck a deal with Toyota. Reports from earlier this year also claimed that Tesla was speaking with CATL for a possible battery deal.
Bloomberg claims that BYD plans to sell its battery business in three years to help raise funds for future expansion. What that expansion includes are left up to imagination, but we have a feeling that it probably includes electric cars.

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