Volkswagen AG broke ground for its battery cell factory in Salzgitter, Germany, the first step of a $20.4 billion investment in new sources of power for the vehicles the group builds.
VW also is launching a new subsidiary dedicated to manufacturing batteries called “PowerCo.” In addition to cell production, the new company will be responsible for activities along the entire battery value chain, including construction of five battery plants across Europe.
By 2030, PowerCo. together with partners in the development of the battery business, to generate annual sales of more than $20.4 billion and to employ up to 20,000 people in Europe alone.
“Today we are not only laying a foundation stone but also marking a strategic milestone,” said Herbert Diess, CEO of Volkswagen AG. “The battery cell business is one of the cornerstones of our new auto strategy which will make Volkswagen a leading provider of the sustainable, software-driven mobility of tomorrow.
“Establishing our own cell factory is a megaproject in technical and economic terms. It shows that we are bringing the leading-edge technology of the future to Germany.”
German Chancellor hails plan
The German Chancellor Olaf Scholz hailed the Volkswagen’s new factory.
The Russian invasion of Ukraine has had a major impact on German economy, which is under pressure to diversify its energy sources away from Russian oil and natural gas. At the same time, the European Union, to the dismay of German automakers, is ramping up efforts to ban the internal combustion engine by 2035.
“Today is a good day for the automotive industry in Germany and Europe. Volkswagen is showing how the future of sustainable, climate-compatible mobility could look. Together, we are laying the foundation for shaping this future to a significant extent in Salzgitter,” Scholz said during the groundbreaking ceremony.
Managing batteries
From Salzgitter, PowerCo. will manage international factory operations, the further development of cell technology, the vertical integration of the value chain and the supply of machinery and equipment to the factories.
Looking ahead, further products such as major storage systems for the energy grid are planned. Following Salzgitter, the next cell factory will be in Valencia, Spain, Volkswagen officials said. Sites are currently being identified for three further cell factories in Europe. In addition to Europe, PowerCo is also already exploring the possibility of further gigafactories in North America.
Innovative technology part of VW plan
Thomas Schmall, member of the Board of Management of Volkswagen AG responsible for Technology and Supervisory Board Chairman of PowerCo, said: “In building our first in-house cell factory, we are consistently implementing our technology roadmap. PowerCo will become a global battery player.
“The company’s major strength will be vertical integration from raw materials and the cell right through to recycling. In future, we will manage all the relevant activities in-house and will gain a strategic competitive advantage in the race to take the lead in e-mobility. We have secured a top team for this great undertaking,” he added.
Volkswagen also unveiled the prismatic unified cell announced at the Power Day in 2021. This allows the flexible use of a raft of different cell chemistries and will be used in up to 80% of all Group models.
Plans call for the new plant to produce unified cells for the volume segment are to be produced from 2025 onwards. In future, the plant is to reach an annual capacity of 40 GWh — enough for about 500,000 electric vehicles.
By 2030, the Volkswagen Group intends to operate six cell factories with a total volume of 240 GWh throughout Europe together with partners. The new unified cell harnesses synergy effects and will reduce battery costs by up to 50%, Volkswagen said in its announcement.