Will Volkswagen give Tesla a run for its money with a planned €10 billion ($15.5 billion) battery factory that will strengthen its position in the electric car market?

The carmaker is currently facing a diesel emissions cheating scandal as well as billions of dollars in penalties, fines and civil liability claims. Amid these troubles, it appears to shift its attention from turbodiesels to battery electric cars with a significant investment in a dedicated battery factory like Tesla Motors’ Gigafactory, a German news daily claimed.

“Volkswagen is considering building a multi-billion-euro battery factory as part of a major expansion of its electric-car portfolio,” reported Handelsblatt, citing company sources.

It added that the facility would enable VW to operate independently of leading Asian battery players such as Panasonic, Samsung and LG.

VW chief executive Matthias Muller is working with his team on a new road map for increasing electric car and hybrid vehicle sales to 1 million per year by 2025 and for increasing the company's investment in batteries. The non-executive supervisory board is believed to study the plans prior to a June 22 annual meeting.

Anonymous sources also saw VW’s executives on board with the plan, which is also deemed in line with the aims of its major shareholder, the state of Lower Saxony.

The target is no less than “the top of the industry,” quoting an insider said to be privy to the major initiative.

Electric car manufacturers are building their own facilities for making batteries, which are among the most expensive components of their products. Together with its partner Panasonic, Tesla is spending up to $6.96 billion to build its Gigafactory.

The factory is predicted to slash its battery costs by 30 percent and help Tesla accomplish its ambitious goal of manufacturing 500,000 cars annually by 2018.

Volkswagen is yet to decide on whether its battery factory will be situated in Germany, Eastern Asia, or Europe, but to meet its target sales a decade from now, the company is sure to invest heavily on the project.

Following its previously announced plans of being a leader in the field by 2018, the group sold only 67,000 electric cars in 2015, most of them hybrids.

Photo: Bruno Kussler Marques | Flickr

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