Auto makers, pumping billions of dollars into developing electric cars, are now facing a critical choice: get more involved with manufacturing the core batteries or buy them from others.
Batteries are one of an electric vehicle’s most expensive components, accounting for between a quarter and a third of the car’s value. Driving down their cost is key to profitability, executives say.
But whereas the internal combustion engine traditionally has been engineered and built by auto makers themselves, battery production for electric cars is dominated by Asian electronics and chemical firms, such as LG Chem Ltd. and Panasonic Corp., and newcomers like China’s Contemporary Amperex Technology Co.
With regulators world-wide pushing car companies to sell more electric cars, auto executives worry there won’t be enough factories building high-quality batteries.