Report: Audi May Source EV Batteries from BYD

Volkswagen AG’s Audi unit is in “advanced” talks with China's BYD Co. as a battery supplier for Chinese market electric vehicles, sources tell Bloomberg News.

The luxury carmaker also is considering investing in BYD’s battery business, according to the report. BYD Chairman Wang Chuanfu previously has said the company may spin off the battery unit by 2022.

Audi says it is in talks with several potential battery partners. BYD declined to comment.

The BYD batteries would be used in upscale cars built on the new EV platform jointly developed by Audi and Porsche, according to Bloomberg. The first EVs using the architecture are due in about two years.

Audi currently sources batteries for the all-electric Q2L e-tron from Ningde, China-based CATL (Contemporary Amperex Technology Ltd.). Audi launched production of the Q2L crossover in China earlier this year with local partner FAW Group.

Last week Bloomberg reported that VW Group aims to strengthen its supply base in China, especially for EV-related technologies. Battery producer Guoxuan High-Tech Co. was cited as a potential partner.

VW plans to deliver 22 million EVs worldwide across its brands by 2028. More than half of the vehicles will be built in China.

BYD, which is backed by American billionaire Warren Buffett, is China's top EV maker. To date, the bulk of BYD’s batteries have been used in its own cars.

Reports last summer said BYD was investing $3 billion to nearly quadruple its EV battery capacity to supply other carmakers. In June, Toyota announced plans to work with several battery suppliers—including BYD, CATL, GS Yuasa and Toshiba—on future EVs.