Volkswagen Group, led by CEO Herbert Diess, is aggressively pushing forward into the future of electric cars. It has committed to a $20 billion investment between now and 2030 to create a new company called PowerCo, which will be responsible for the automaker’s global battery business. This week, it broke ground on the first of 6 new European battery factories, which will be… located in Salzgitter†
According to TechCrunch, PowerCo will manage the Volkswagen Group’s international plant operations, develop cell technology, vertically integrate the value chain, supply the plants with machinery and equipment, and manage the battery recycling activities. The Salzgitter plant is expected to supply approximately 500,000 EVs. Together, the new factories planned for Europe could employ 20,000 workers and supply enough batteries to power 3 million electric cars. Volkswagen expects the 6 factories to halve the cost of batteries for its cars compared to current prices.
In a press releaseDiess called the launch of PowerCo a “strategic milestone. Setting up your own cell factory is technically and economically a mega project. It shows that we are bringing the leading technology of the future to Germany.”
The 6 battery plants and the new company are part of Volkswagen’s efforts to ramp up electric vehicle production worldwide. Earlier this week. The world’s second-largest automaker announced plans to expand its operations in China with “some major investments” and a China office recruiting campaign for CARIAD, its in-house automotive software arm.
Battery production to start in 2025
Volkswagen said battery cell production will begin in 2025 at the Salzgitter plant, which will serve as the standardized model for future factories, making it easier to replicate and scale. PowerCo will establish its second cell factory in Valencia, Spain, and is considering expanding the model to North America. Locations for the 4 other European factories have not been announced. Building grid-scale energy storage batteries is also under consideration. PowerCo is led by CEO Frank Blome.
Thomas Schmall, Volkswagen board member for technology, says: “When building our first in-house cell factory, we are consistently executing our technology roadmap. PowerCo becomes a global battery player. The company’s great strength will be the vertical integration of raw materials and cell to recycling “Going forward, we will do all relevant activities in-house and gain a strategic competitive advantage in the race to lead the way in e-mobility. We have secured a top-class team for this great undertaking.”
Daniela Cavallo, chairman of the General and Group Works Council of Volkswagen AG, was a thorn in the side of Diess last year after he said that the production of electric cars could go up to 30,000 fewer vacancies, but now she is all smiles. “Today is a day to celebrate. In the heart of Europe, we are creating a new future-oriented segment and up to 20,000 future-proof jobs, 5,000 of which are in Salzgitter alone, at VW.
“Our genuine commitment and responsibility for the transformation of our proud engine factory and the exemplary retention of permanent jobs for its employees continues. This principle remains one of our guiding principles, just as it was very early in the battery forward-looking area, is firmly anchored in the Pact for the Future and has been firmly defended for many years. As a result of these efforts, we now have a showcase for environmental and social transformation.”
A blueprint for future Volkswagen factories
Salzgitter will serve as a blueprint for cell factories across Europe, setting new standards in sustainability and innovation. “What we have tested millions of times with vehicle platforms such as the MQB and CBG, also lays the foundation for setting up cell production: we will standardize based on European standards and scale up. In this way we combine speed and cost optimization with the highest quality”, says Frank Blome.
Standardization will not only cover equipment, buildings and infrastructure, but also products, processes and IT. This creates factories that can be quickly converted for further product and production innovations. Each plant will run 100% on electricity from regenerative sources and will be designed for future closed loop recycling.
The takeaway
This announcement proves that Volkswagen is fully committed to the EV revolution and that it is serious about closely monitoring battery supply in the future. We know there’s a battery factory (or two) underneath active focus on North America† We also know that the company is dealing with slow sales in the US and China. But all that keeps the company from moving aggressively forward with the EV revolution and that’s very good news for electric car proponents.
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