Volkswagen is creating a single company to consolidate activities along the value chain for batteries, from processing raw materials to developing a unified battery for all its vehicles to managing the European gigafactories as well as reusing discarded car batteries and recycling the raw materials they contain.
The company, based in Salzgitter, Germany, will run five gigafactories across Europe. The first is a €2bn plant in Salzgitter, with plans to build additional gigafactories at sites in Spain and Eastern Europe. The exact locations for gigafactories 3 and 4 are due to be decided in the first half of 2022. Volkswagen intends to open two more battery cell factories in Europe by 2030.
In parallel to the development of these five gigafactories by the newly formed European company, VW is an investor in Swedish start-up Northvolt which is building a further factory in Skellefteå in northern Sweden. This will produce battery cells for the premium automotive segment starting in 2023. Northvolt already has an established partnership with the Volkswagen Group in the area of premium battery cells.
The new venture is expected to include the recent joint venture with Umicore and ‘semi-solid’ battery technology company with IP from 24M in the US.
Over the next five years, VW plans to invest around €52bn in the development and production of new electric vehicles with batteries, charging and energy.
“We want to offer our customers powerful, inexpensive and sustainable vehicle batteries, which means we need to be active at all stages of the battery value chain that are critical for success. We are now bundling our power in Salzgitter, with the aim of encouraging innovation and securing the support of the best partners for our new company going forward. We already have a strong battery team in Salzgitter made up of 500 employees from 24 countries – and we are continuing to strengthen this team at leadership level,” said Thomas Schmall, member of the Board of Management for technology at Volkswagen and CEO of Volkswagen Group Components.
The new company will be led by battery boss Frank Blome, with Soonho Ahn, the former as Global Head of Battery Development at Apple, taking on a leading role in the development of battery cells.
Kai Alexander Müller of Barclays Investment Bank in London will also move to Salzgitter, where he will contribute his financial experience in the capital market and in equity research.
Battery cell production in Salzgitter is set to start in 2025, one of six gigafactories planned in Europe to cover the growing demand for battery cells within the Group.
The gigafactory in Lower Saxony will produce unified battery cells for the Volkswagen Group’s volume segment. In its initial phase, the factory is set to have an annual capacity of 20 gigawatt hours; this is planned to double to 40 gigawatt hours at a later stage.
On the basis of the current planning round, the Volkswagen Group is investing heavily in developing battery cell production in Salzgitter. All in all, €2bn has been earmarked for the construction and operation of the Salzgitter gigafactory up to the start of production.
Battery cell manufacture in Salzgitter is expected to provide jobs for more than 2,500 people in the future. These employees will principally be staff from the Salzgitter engine plant, who will be retrained in order to take on these new roles. Some of these staff bring expertise – in planning or logistics for example – that will be useful in the construction of the factory. Where necessary, this know-how transfer will be supplemented by new competencies, for example by recruiting staff externally.
The Group is also creating dedicated technology platforms including the modular electric drive matrix MEB and an SSP platform, due to launch in 2026.
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