VW U.S. chief warns of industry challenges with EV battery shift

Volkswagen's ID Buzz is pictured in a production line in Hanover
The fully electric VW ID Buzz, is pictured on a production line at a Volkswagen Commercial Vehicle plant in Hanover, Germany, June 16, 2022. REUTERS/Fabian Bimmer/

WASHINGTON, June 16 (Reuters) - Volkswagen AG's (VOWG_p.DE) top U.S. executive said on Thursday the United States faces major challenges in ramping up battery production to facilitate a shift to electric vehicles including attracting skilled workers, mining for key metals and supply chain issues.

Scott Keogh, chief executive of Volkswagen Group of America, told an Automotive News forum in Washington that the move to EVs is the single biggest "industrial transformation in America."

Automakers and battery companies are committing tens of billions of dollars to building new battery plants and EV assembly plants throughout North America as they scale up electric vehicle production. This move, focusing on vehicles powered by advanced new batteries rather than gasoline, requires the United States to overcome a series of challenges, Keogh said.

These challenges include attracting enough skilled workers, dramatically boosting and facilitating U.S. mining for critical minerals to produce the lithium batteries for EVs, supply chain issues and more broadly addressing healthcare, education and infrastructure, Keogh said.

Keogh told Reuters on the sidelines of the forum that potentially hundreds of thousands of people could be employed by 2030 in U.S. battery industry production.

"It comes down to labor, it comes down to the infrastructure, it comes down to the investment," Keogh said.

President Joe Biden has set a goal of 50% of new-vehicle sales being electric or plug-in electric by 2030, but has not endorsed phasing out gasoline-powered vehicle sales by any specific date.

Keogh estimated that the United States is making 150,000-200,000 batteries a year and that seven years from now "we need to be making 8.5 million batteries" annually.

"This is a scale of investment that honestly is going to make the industrial revolution look like a cake walk. It's massive," Keogh said.

Keogh also said the United States needs to do more to boost manufacturing capacity. The U.S. manufacturing sector has fallen from than 17 million jobs in 2000 to 12.8 million today, which has rebounded to about pre-COVID-19 pandemic levels.

"We need to build a collective ecosystem turning America into a manufacturing society again. I think America has become a service economy," Keogh said. "The challenge of getting somebody who's been working at a Starbucks taking 20-minute breaks, smoking a cigarette out back and is now jumping into a factory ... is a whole new world."

Keogh said long shifts for factory workers are much different.

"This is brutal, difficult, challenging work," Keogh said.

Reporting by David Shepardson; Editing by Will Dunham

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