Europe's difficulty with LFP is usually described as a cost gap. Sebastian Wolf describes it as an absence.

LFP is cheap in China, PowerCo's chief operating officer says, because the supply chain there is completely localised and currently carrying significant overcapacity. Europe is in a different position entirely. On cathode active material for LFP, his assessment is that we just do not have that availability in the market for the raw materials right now.

Not costly. Not there.

He expects that to change in a few years, which is where the interesting question starts rather than ends. By the time Europe's LFP supply chain exists, a newer technology may already have overtaken the one it was built to serve. That is the question PowerCo is working on hardest, and it shapes what the company has chosen to build.

One format, and nothing else fixed

PowerCo is a wholly owned Volkswagen subsidiary set up to develop and produce the unified cell, and to scale it in volume across Europe and North America.

The unified cell was an answer to a problem Volkswagen had made for itself. Across the group there were pouch cells, prismatic cells and cylindrical cells, in a range of sizes, and that variety made it complicated to move between generations of car. So Volkswagen standardised: the unified cell is a prismatic cell at a fixed size, chosen to minimise variation in geometry and to make it possible to put newer cell technology into cars at facelifts and new product generations.

The part Wolf is careful about is what standardisation does not cover. Fixing the box does not fix what goes in it. PowerCo is committed to one form factor and deliberately flexible on chemistry and on the technology inside: LFP, NMC, and technologies that are not on the market yet.

That flexibility is the hedge against the timing problem. If something supersedes LFP, the format does not have to change with it.

The list of what makes a European cell expensive

Asked about operating in the European Union, Wolf gives an inventory rather than a complaint, and it is more specific than most.

Cost, first, because PowerCo competes against very strong and very experienced players from Asia. The German supply chain due diligence act, whose full name he offers in German before noting that it is a complicated one. Recycling quotas that have to be met. Labour regulation, particularly in the German labour market, which puts heavy pressure on labour costs. Legislation that raises construction and capital expenditure. And energy, which rose dramatically over recent years before easing more recently.

All of it lands on operating expenditure. His phrasing is that these drivers put PowerCo in a very complicated situation, which the company has to solve and is solving.

Against that he sets two facts. The first production line has launched and the unified cell is in production. And PowerCo is moving forward with significant customer volume.

Students, not teachers

The most quotable thing Wolf says is about posture, and it is a direct inversion of how Volkswagen behaved in the engine era.

The company needs, he says, "to not see ourselves as teachers, how Volkswagen and the engine world has been in the past". In cells it is the student: trying to learn, to take the experience available now, to build its own expertise.

The commercial version of the same point is blunter. Becoming a me-too producer will not help. Long-term success requires innovative products and innovative production technologies, and the reason is arithmetic rather than pride: something has to compensate for the higher labour costs.

That is what the innovation funnel is for. More than 50 production innovations are in it, dry coating among them. On cells, PowerCo is looking at chemistries not yet commercial, and working with QuantumScape on all-solid-state to understand how it might eventually be scaled.

The framing is worth sitting with. A European cell maker that matches Asian process capability at European input costs still loses. The process itself has to be better.

Whether anything overtakes LFP

Wolf is not dismissive of LFP. European EVs are under pressure on price and cost competitiveness, and LFP gives a significant price advantage in the Asian and Chinese markets, so it is under active consideration at PowerCo.

He adds a caveat that gets lost in most versions of this argument. The advantage moves with raw material prices, and there are break-even points at which NMC becomes more effective on a euro per kilowatt hour basis, because of its higher energy density.

Then he relays something from the Chinese market that rarely reaches European coverage. Listen to that market, he says, and LFP has acknowledged problems with cold-temperature performance, and Chinese manufacturers are themselves looking into alternatives.

So PowerCo's answer is to be in both places at once: working on LFP, and working on whatever follows it, in order to be, in his words, "the one step ahead we need to be in order to be competitive as a European player".

The slowdown that is not in the registration numbers

On demand, Wolf takes issue with the premise before answering the question.

European EV adoption is not slowing in the sense of no longer growing. Registration numbers are still increasing month on month. What exists is a perception of a slowdown, and it is country-specific. Germany saw an immediate hit to sales when incentives were reduced. Spain is running double-digit year-on-year growth.

What he does treat as a real constraint is charging, and he splits it in two. Charging cost, which he ties back to energy cost and where he says there are several initiatives inside the Volkswagen group aimed at making charging cheaper for customers. And the charging network itself.

His argument for the customer is total cost of ownership, which he thinks is the thing that actually needs telling. His observation is that people who have driven an EV tend to stay with one, because it is more comfortable.

This piece draws on the full conversation, which is available with a complete transcript on the episode page.