Volkswagen Launching German Battery-Production Site

Volkswagen Group forms a battery-production division based at its Salzgitter manufacturing site in Germany’s Lower Saxony region, the traditional home of its internal-combustion-engine production activities.

The new division, named PowerCo, will manage the German automaker’s first European-based battery factory, including R&D, supply-chain activities, purchasing and the production of battery cells and modules to be used in Volkswagen’s future ID.-badged electric models.

VW says it is investing more than €20 billion ($20.4 billion) in PowerCo. That investment includes €2 billion ($2.4 billion) in the construction of the so-called SalzGiga factory, creating 20,000 jobs. VW is targeting annual sales of more than €20 billion by 2030 as it seeks to become the world’s leading manufacturer of battery-electric vehicles.

In total, the automaker plans to open six battery plants together with partners in Europe. The first, a collaboration with Northvolt, will open in Sweden in 2023, followed by the SalzGiga site in 2025.

At a groundbreaking ceremony for the new factory, Volkswagen Group Chairman Herbert Diess notes a third European PowerCo factory is planned by the automaker’s Spanish brand SEAT in Valencia, Spain. “We have significant car-assembly plants and we have to supply them. The battery plants should be relatively close to the assembly plants,” he says.

Diess tells media representatives plans also are being developed to establish a battery factory close to VW’s U.S. manufacturing site in Chattanooga, TN. “We’re overhauling our U.S. strategy, aiming to grow our business. And, in line, we’re looking for a site for battery manufacturing,” he says.

Other VW battery plants are expected to be built in China, where the company collaborates with battery cell manufacturer Gotion Hi-Tech.