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Battery availability to determine pace of VW's switch to electric cars, CEO says

Volkswagen AG expects about 15% of the cars it sells in 2025 to have electric powertrains but the pace of the company's switch to the zero-emission technology will be determined by battery availability, CEO Herbert Diess said March 12, adding that the automaker is exploring the idea of participating in lithium-ion battery cell production in Europe.

"It may be a bit quicker but not that much quicker because we also need the batteries for this. So it will be within this range and it will still be 80% conventional cars," Diess said at a press conference broadcast online from Volkswagen's headquarters in Wolfsburg, Germany.

Still reeling from the diesel emissions cheating scandal uncovered in 2015 that has cost the company $28.2 billion as of January as well as significant reputational damage, Volkswagen has been pressing ahead with electrification much faster than its peers as it seeks to move on not only from the affair but also the combustion engine technology at the heart of it.

It has unveiled a forthcoming range of "I.D." branded electric hatchback, sedan and SUV models, as well as a mini-van recalling the iconic VW campervan beloved of hippies and surfers in popular culture, all built on a single platform which Volkswagen has offered to license to other manufacturers in order to recoup some development costs. Diess put those costs at "north of €1 billion."

But Diess' forecast for electric cars' share of Volkswagen's range and pledges by other major automakers to offer many more hybrid or full-electric options in the early 2020s will increase competition for lithium-ion battery cells, the majority of which are sourced from suppliers in China, Korea and elsewhere in Asia who have occasionally encountered supply difficulties with some component metals.

Germany and France have jointly pledged €1.7 billion to spur private investment in the production of the battery cells in Europe, the single most valuable component of an electric car.

"With a view to the increasing demand, we're also taking now a close look at possible participation in battery cell manufacturing facilities in Europe of our own," Diess said, without offering further details.

The carmaker announced in February that it aims to become carbon neutral by 2050 across its operations. Diess said production of the company's I.D. electrified range, which begins towards the end of 2019, would be carbon neutral from the outset, including supplied components, and that Volkswagen's power subsidiary Elli would offer wall boxes for home charging that run on renewable energy.

The company is also converting its power station that supplies its Wolfsburg plant, Volkswagen's largest, to gas from coal to slash emissions.

Some observers have questioned whether Volkswagen's headlong rush into electrification could be risky should more effective alternative technology come to the fore, but Diess suggested that industry players could lose out through too much hesitancy amid growing pressure to reduce air pollution and carbon emissions.

"Chinese society decided quite clearly they want this system change. They back electric mobility and it's going to come. We still seem to be a bit more changeable, at least in our public discussion, and I feel that this time should now be over. The facts are quite clear and the climate targets can only be attained with electric vehicles," Diess said.