Volkswagen enters global battery business with PowerCo

Volkswagen is entering the global battery market with the launch of its new business PowerCo, with a new cell factory to be constructed.

The manufacturer is expanding its e-mobility with the announcement of a new  cell factory in Salzgitter, Germany, with the responsibility for its global battery business to be held by the newly created company PowerCo.

With immediate effect, the new company will be responsible for activities along the entire battery value chain. Up to 2030, PowerCo is to invest more than €20 billion together with partners in the development of the business area, to generate annual sales in excess of €20 billion and to employ up to 20,000 people in Europe alone.

Looking ahead, further products such as major storage systems for the energy grid are planned. 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.

Thomas Schmall, Member of the Board of Management of Volkswagen AG responsible for Technology and Supervisory Board Chairman of PowerCo, said: “In building our first in-house cell factory, we are consistently implementing our technology roadmap. PowerCo will become a global battery player. 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. We have secured a top team for this great undertaking.”

As part of the announcement, the concept for new battery cell factory in Salzgitter was also presented.

Salzgitter is to be a blueprint for cell factories throughout Europe and will set new standards in terms of sustainability and innovation, according to Volkswagen.

“What we have put to the test millions of times over with vehicle platforms such as the MQB and MEB will also lay the foundation for establishing cell production: we will be standardizing on the basis of European standards and upscaling. This way, we will combine speed and cost optimization with the highest quality levels“, said PowerCo CEO Frank Blome.

Standardization will not only cover equipment, buildings and infrastructure but also products, processes and IT. This way, factories that can rapidly be converted for further product and production innovations will be created. Each factory will be operated 100 percent on electricity from regenerative sources and will be designed for future closed-loop recycling.

Volkswagen also unveiled the prismatic unified cell announced at the Power Day in 2021. This allows the flexible use of a raft of different cell chemistries and will be used in up to 80 percent of all Group models. At Salzgitter, unified cells for the volume segment are to be produced from 2025 onwards. In future, the plant is to reach an annual capacity of 40 GWh – enough for about 500,000 electric vehicles. By 2030, the Volkswagen Group intends to operate six cell factories with a total volume of 240 GWh throughout Europe together with partners.