Volkswagen prepares to manufacture battery cells in Germany

Building batteries in-house could help the company avoid shortages from Asian suppliers.

Volkswagen has confirmed plans to begin building battery cells in-house at a factory in Germany.

The $1.1 billion investment, reported by Reuters, is presumably aimed at reducing reliance on Asian battery suppliers as the German automaker prepares to ramp up its EV output.

The news comes on the heels of a public spat between Tesla and Gigafactory partner Panasonic. The Japanese company has reportedly struggled to scale battery production in Nevada for Tesla's vehicles, allegedly causing a bottleneck that limits overall Model 3 production volume.

A Panasonic executive this week told reporters that battery supplies will simply "run out" if Tesla brings the Model Y to market on schedule next year. The Model Y is expected to outsell the Model 3 by a significant margin, targeting the ever-growing crossover segment.

Volkswagen hopes to upstage Tesla as EVs go mainstream, targeting an annual volume of one million battery-powered vehicles by 2025.