VW kicks off $A30b EV battery offensive

VOLKSWAGEN Group has announced that it will invest more than €20 billion ($A30 billion) in a joint venture battery cell business to reach annual sales exceeding €20 billion by 2030.

At the ground breaking ceremony for its first European battery cell factory in Salzgitter, Germany, VW said a new entity called PowerCo will manage its global battery production and research from raw material mining through to recycling and projects including energy storage systems.

The investment is part of VW’s plan to achieve leadership in global battery production and sales. 

Speaking to the media before the ceremony, German Chancellor, Olaf Scholz said: "Today is a good day for the automotive industry in Germany. 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."

VW is on record as saying the production of enough batteries to power all cars is by far the biggest challenge of the shift to electric vehicles.

The giant car-maker has rolled out a plan to build factories with a joint capacity of 240 gigawatt hours by 2030.

This includes six plants in Europe, of which Salzgitter is the "blueprint" for VW's future standardised production facilities, and two in North America.

“What we have put to the test millions of times over with vehicle platforms such as the MQB and MEB will also lay the foundation for establishing cell production, we will be standardising on the basis of European standards and upscaling,” said PowerCo CEO Frank Blome.

At the ceremony, VW presented the standardised prismatic unified cell battery it announced in 2021 and which is to be used in up to 80 per cent of the group's models. 

“This way, we will combine speed and cost optimisation with the highest quality levels“, said Mr Blome.

Volkswagen says standardisation will not only cover equipment, buildings and infrastructure but also products, processes and IT.

This way, factories that can rapidly be converted for further product and production innovations will be created. Each factory will be operated 100 per cent on electricity from renewable sources and will be designed for future closed-loop recycling.

Battery production at the new plant will start in 2025 and Volkswagen is pushing quickly forward with its e-mobility strategy.

Volkswagen CEO Herbert Diess said: “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 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.”

PowerCo’s brief will not only cover global battery activities, it will manage international factory operations, the development of cell technology, the vertical integration of the value chain and the supply of machinery and equipment to the factories.

Looking ahead, products such as major storage systems for the energy grid are planned.

Following Salzgitter, the next cell factory is to be established at Valencia, Spain. 

Sites are 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.