On Thursday, the Volkswagen Group opened the first of six battery factories it plans to build in Europe, marking the official start of a new battery business that will invest $20 billion through 2030 to become the world leader in electric vehicles.
A new Volkswagen company called PowerCo will be responsible for the automaker’s global battery business, managing the value chain from raw materials to recycling. The automaker expects the German Salzgitter plant and five more plants planned for Europe to cut battery costs in half, a key competitive advantage as the global electric vehicle market grows.
The plants and the new company are part of Volkswagen’s efforts to increase the production of electric vehicles around the world. Earlier this week. the world’s second largest automaker announced plans develop your business in China with “some major investment” and hiring staff in the Chinese office of CARIAD, Volkswagen’s own automotive software division.
Volkswagen said battery cell production will begin in 2025 at the Salzgitter plant, which will serve as a standardized model for future plants, making replication and scaling easier. PowerCo will locate its second battery manufacturing plant in Valencia, Spain and is considering expanding the model to North America. Locations for four other European plants have not been announced.
PowerCo will manage international manufacturing operations, develop cell technologies, vertically integrate the value chain, and supply factories with machinery and equipment. The Salzgitter plant is expected to deliver around 500,000 electric vehicles. Together, the new plants planned for Europe could supply around 3 million electric vehicles.
Volkswagen said PowerCo and partners will invest more than 20 billion euros ($20.34 billion) by 2030 and employ up to 20,000 people in Europe. Additional projects include the development of storage systems for the power grid.
VW CEO Herbert Diess called the company’s launch a “strategic milestone”.
“Setting up your own cell manufacturing plant is a mega project from a technical and economic standpoint,” Diess said in a statement. “It shows that we are bringing the cutting-edge technology of the future to Germany.”
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