“Media reports suggest that Volkswagen might change its battery supply agreement worth US$55.8 billion with Samsung SDI. The point is that Volkswagen and Samsung previously agreed on the supply of 20GWh worth of batteries, but Samsung SDI will instead supply 5GWh worth of batteries due to disagreement on output and schedule. Both companies do not mention any details citing NDA (Non-Disclosure Agreement) regarding this news. In the past, Volkswagen reportedly issued long-term battery supply contracts worth around US$50 billion for over 300GWh in total with multiple battery manufacturers for its future EV fleet on the MEB (Modular Electric Drive Kit) platform. Volkswagen split those billions worth of contracts between several companies – Samsung SDI, LG Chem, SK Innovation, and CATL. Thus, the contract amount of US$55.8 billion mentioned above must be the total amount for all the suppliers, not Samsung SDI only. Such long-term multi-vendor contracts will help to clear supply bottlenecks at a time of soaring demand and hold out the promise of cheaper batteries over time. Here, the initial contracts for long-term supply are not usually 100% fixed and somewhat flexible, depending on the market situation in the future. Even if we cannot get the specific reason for their contract adjustment, it seems real that Samsung SDI is focussing on the profitability of a contract rather than the size of a contract, unlike other vendors who do have another cash cow beside the battery business.” – Liz Lee