Auto major Volkswagen, which is making a concerted bid to become an EV maker, is, however, constrained by the fact that it is dependent on battery suppliers in Asia. In the event, the German automaker is ploughing in billions of dollars into its electric vehicle battery cell production and become self-reliant on the important component of EVs.
Volkswagen is consolidating its EV battery business into a new company named PowerCo. This will handle the entire gamut of EV battery business, including sourcing raw materials and battery recycling. Ground breaking function on the first of six battery plants planned for Europe was held yesterday at its plant in Salzgitter, where battery cell production will start in 2025.
The plant, which will be the model for the other five too planned by Volkswagen, will eventually reach an annual capacity of 40 GWh, enough for about 500,000 EVs. By 2030, when all the six of the factories will be fully functional, their combined annual capacity would 240 GWh to supply roughly 3 million VW vehicles each year.
PowerCo and its partners will invest around 20 billion Euros in the six plants, and the six plants are to generate annual sales in excess of 20 billion euros while employing up to 20,000 people in Europe alone.
Standardisation across board in 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 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."
Following Salzgitter, the next cell factory is to be established at Valencia. Sites are currently 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.
Volkswagen said the company's major strength will be vertical integration from raw materials and the cell right through to recycling. "In future, we will handle all the relevant activities in-house and will gain a strategic competitive advantage in the race to take the lead in e-mobility."
Volkswagen said there will be standardization not only cover equipment, buildings and infrastructure but also 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 Power Day event in 2021. This standard cell design will eventually be used in up to 80% of all VW models. These unified cells will be produced in Salzgitter from 2025 onwards. The unified cell harnesses synergy effects and will reduce battery costs by up to 50%, Volkswagen claimed. The cells are housed in a rigid housing that is rectangular in shape like building blocks. The design makes the most use of space inside the battery pack compared to cylindrical cells that companies like Tesla are focused on.
Volkswagen CEO Herbert Deiss is already on record saying that he believes that company can overtake Tesla and become the world's biggest producer of EVs by 2025.
