Volkswagen Launches an Electric Battery Production Facility

Volkswagen Group recently commemorated the new facility for electric battery manufacture in Salzgitter, Germany. 

The new EV battery company, PowerCo, announced the construction of their first EV battery cell factory in Salzgitter. It plans to invest more than $20 billion into production to become a leading producer of EV batteries by 2030.

Volkswagen plans to build six battery plants across Europe, and PowerCo is the first among the six. The investment would yield an annual sales of €20 million, creating up to 20,000 jobs in Europe. 

PowerCo will be responsible for business development in Salzgitter and all activities along the entire battery value chain. It will manage the vertical integration of the value chain, cell technology development, equipment supply to other factories, and international factory operations. 

Cell production would begin in 2025, creating the model for future factories and extending production to new plants across North America and Europe. A second plant is expected in Valencia, Spain.

Sustainability and EVs

Volkswagen is one of the many vehicle companies seeking to explore different models of electric vehicles. It wants to set a standard of innovation and sustainability, moving closely behind Tesla in electric vehicle manufacture.

Each factory will operate solely on electricity from regenerative sources. Plans are in place for renewable storage systems for the energy grid.

On sustainability, German Chancellor Olaf Scholz said, ‘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.’

The company is partnering with battery cell makers and mining companies to secure materials and technological expertise. ‘We hired very seasoned and experienced executives from the battery business,‘ Chief Executive Officer of Volkswagen, Herbert Diess, said. ‘We’re gearing up to become one of the bigger battery-cell producers.’

Executives who are leaders in the EV battery-making world will oversee PowerCo, including Frank Blome, head of Volkswagen’s battery cell and systems as the unit’s CEO, and former Apple Inc. executive Soonho Ahn as a chief technical officer.

By integrating into batteries, Volkswagen aims to monopolize the industry and rely less on Asian suppliers. The company focuses on long-term relevance, ignoring the looming supply chain and uncertainty issues. PowerCo will begin the search for raw materials despite the soaring prices faced by EV manufacturers.

PowerCo would begin by sourcing cathode materials from Belgium-based miner Umicore SA, battery-grade lithium hydroxide from Vulcan Energy Resources, and machinery from Robert Bosch.

Volkswagen also indicated that PowerCo was set up to facilitate a potential listing for sales of its shares by 2024. 

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. Today we are not only laying a foundation stone but also marking a strategic milestone. The battery cell business is one of the cornerstones of our NEW AUTO strategy,’ said Herbert Diess.

The Salzgitter plant is expected to produce 40 gigawatt-hours of cells per year, supplying up to 500,000 EVs. The six plants together should supply about 3 million EVs for Europe.

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