Car giant Volkswagen, which is jointly bidding to become an electric vehicle maker, is, however, limited by the fact that it is dependent on battery suppliers in Asia. At the event, the German automaker is investing billions of dollars in its production of electric vehicle battery cells and becomes self-sufficient in the important component of EVs.
Volkswagen is consolidating its EV battery business into a new company called PowerCo. This will handle the full range of electric vehicle battery businesses, including raw material sourcing and battery recycling. The groundbreaking role at the first of six battery plants planned for Europe was carried out yesterday at its plant in Salzgitter, where battery cell production will begin in 2025.
The plant, which will be the model for the other five also planned by Volkswagen, will eventually reach an annual capacity of 40 GWh, enough for around 500,000 EVs. By 2030, when all six plants are fully functional, their combined annual capacity would be 240 GWh to supply around 3 million VW vehicles a year.
PowerCo and its partners will invest around €20 billion in the six plants, and the six plants are expected to generate annual sales in excess of €20 billion, employing up to 20,000 people in Europe alone.
General standardization at PowerCo
Herbert Diess, CEO of Volkswagen AG, said: “Today we are not only laying a foundation stone, but also marking a strategic milestone. The battery cell business is one of the pillars 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 mega-project in technical and economic terms. It shows that we are bringing the cutting-edge technology of the future to Germany.”
After Salzgitter, the next cell factory will be established in Valencia. Sites are being identified for three more cell factories in Europe. In addition to Europe, PowerCo is also already exploring the possibility of new gigafactories in North America.
Volkswagen said the company’s greatest strength will be vertical integration from raw materials and cell to recycling. “Going forward, we will handle all relevant activities in-house and gain a strategic competitive advantage in the race to take the lead in electric mobility.”
Volkswagen said there will be standardization not just for equipment, buildings and infrastructure, but also for products, processes and IT. Each factory will be operated 100% on electricity from regenerative sources and will be designed for future closed-loop recycling.
‘Volkswagen can overtake Tesla’
Volkswagen also unveiled a new prismatic unified battery cell at its 2021 Power Day event. This standard cell design will be used in up to 80% of all VW models. These unified cells will be produced in Salzgitter from 2025. The unified cell takes advantage of synergy effects and will reduce battery costs by up to 50%, Volkswagen said. The cells are housed in a rigid rectangular-shaped housing, like building blocks. The design makes the most of the space inside the battery compared to the cylindrical cells that companies like Tesla are focused on.
Volkswagen CEO Herbert Deiss is already on record saying he believes the company can overtake Tesla and become the world’s largest producer of EVs by 2025.