VW creates new company and enters global battery business

Volkswagen is expanding into the global battery business with its new factory that will be built in Salzgitter, Germany. The company has officially broken ground on the new facility which is the first out of six it plans to build across Europe.

The new chapter in VW’s history will be handled by a new company - PowerCo. It has been set up by the VW to purely focus on the battery business, the new company will be responsible for the entire value chain - from sourcing materials to selling finished products. PowerCo will have the responsibility to develop the business area in Salzgitter and to expand the production to new sites across Europe and North America.

The new company plans to invest €20 billion within the next eight years in developing the new factories and their surrounding areas; it will employ at least 20,000 people across Europe. PowerCo plans to open factories in North America as well.

The new company takes over all battery-related international factory management and it becomes responsible for development of new battery technologies. PowerCo follows Tesla with full vertical integration of value chain, machinery and equipment to the factories. The company has already plans in place for manufacturing of storage systems for the energy grid industry.

Factory in Skelleftea, Sweden is the first of the Giga factories VW plans to open. The VW group has invested €500 million into the partnership with Nortvolt and owns a 20 percent stake in the company. First batteries from the Swedish factory will reach the market in 2023. All together VW has invested €1.4 billion into that location since 2019. Salzgitter joins three locations already identified for new factories across Europe, with Valencia in Spain being the next to follow with site development.

Salzgitter has a longstanding history with VW - it’s where the K70 was manufactured from July 1970. Audi and VW engines were manufactured at Salzgitter along with the Type 4 shortly followed by the first Passat. In 1975 the factory was retooled to focus on engine production and it’s where the first TDi originated from in 1989, it’s where the famous VR6 was made from 1991. All marine VW engines are manufactured in Salzgitter as well as the W16 engine that powers Bugatti.

New battery factory will create an additional 5,000 jobs in the area and will retain all existing employees. The facility will handle the entire life cycle of battery production from handling raw material to recycling of old cells. All factories will be built by the same standards allowing them to remain flexible and quickly adaptable to new technologies. Each factory will be operated by electricity from renewable sources and will operate closed-loop recycling.

PowerCo will use the prismatic unified cell architecture in its batteries which allows for use of different cell chemistries. The cells will be manufactured from 2025 with the factory planned capacity to be 40 GWh which is enough to supply 500,000 electric vehicles. By 2030 PowerCo plans to have all six European factories up and running with a combined capacity of 240 GWh. The unified prismatic cell harnesses synergy effects and can offer manufacturing savings of up to 50% when compared to current batteries.

It didn’t take VW long to catch up to the rest of the field. In fact the company looks set to overtake the competition within the next few years and its global plans start coming together rather quickly. Tesla may have been the king for a while but it got caught napping and not even the Cybertuck will help it to hold on to the crown.

Here is the video from the SalzGiga event - it's an hour long and it's in German but it is full of very interesting info and if you want to have a peak at what VW and PowerCo are planning then it is well worth watching: