Volkswagen launches PowerCo for global battery business; €20 billion investment; standard factories
Groundbreaking ceremony for the Volkswagen Group’s first cell factory in Salzgitter; production will start in 2025. Responsibility for the global battery business is to be assumed with immediate effect held by the newly founded company “PowerCo”. In addition to cell production, the new company is responsible for activities along the entire battery value chain.
Future gigafactory for battery cells at the Salzgitter site: Salzgiga.
By 2030, PowerCo, together with partners, is to invest more than 20 billion euros in the expansion of the business area, generate annual sales of over 20 billion euros and employ up to 20,000 people in Europe alone.
Today we are not only laying a cornerstone, 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. Building your own cell factory is technically and economically a mega project. It shows that we are bringing the cutting-edge technology of the future to Germany!
– Herbert Diess, CEO of Volkswagen AG
The Volkswagen Group bundles its worldwide battery activities in the European company (SE) PowerCo. From Salzgitter, the company controls international plant operations, the further development of cell technology, the vertical integration of the value chain and the supply of plants with machines and systems.
Further products such as large-scale storage for the energy grid are planned in the future. After Salzgitter, the next cell factory is to be built in Valencia. Locations are currently being identified for three further cell factories in Europe. In addition to Europe, PowerCo is already examining the possibility of further gigafactories in North America.
PowerCo is to be managed by CEO Frank Blome and board members Sebastian Wolf (Chief Operations Officer), Kai Alexander Müller (Chief Financial Officer), Soonho Ahn (Chief Technology Officer), Jörg Teichmann (Chief Purchasing Officer) and Sebastian Krapoth (Chief Human Resources Officer).
With the construction of our first cell factory, we are consistently implementing our technology roadmap. PowerCo becomes a global battery company. The company’s great strength will be vertical integration from raw materials to cells to recycling. In the future, we will handle all relevant activities in-house and give ourselves a strategic competitive advantage in the race for leadership in e-mobility. We have won a top team for this great undertaking.
—Thomas Schmall, Chief Technology Officer at Volkswagen AG and Chairman of the PowerCo Supervisory Board
standard work. At the ground-breaking ceremony, the Group presented the concept of the standard factory for the first time; Salzgitter should be a blueprint for cell factories throughout Europe and set new standards in terms of sustainability and innovation.
What we have tested millions of times with vehicle platforms such as MQB and MEB will also lay the foundation for setting up cell production: we will standardize and upscale based on European standards. This is how we combine speed and cost optimization with the highest quality.
– PowerCo CEO Frank Blome
Standardization includes not only devices, buildings and infrastructure, but also products, processes and IT. This creates factories that can be quickly converted for further product and production innovations. Each factory is powered by 100% renewable electricity and designed for future closed-loop recycling.
Head of Battery Cell Development Luna Yzaguirre Sanchez with Unified Cell
Volkswagen also introduced the prismatic unit cell announced at Power Day 2021. (previous post.) This enables the flexible use of different cell chemistries and will be used in up to 80% of all Group models.
Salzgitter is to produce unit cells for the volume segment from 2025. In the future, the plant should achieve an annual capacity of 40 GWh – enough for around 500,000 electric vehicles. By 2030, the Volkswagen Group intends to work with partners across Europe to operate six cell factories with a total volume of 240 GWh.
The new unified cell uses synergy effects and will reduce battery costs by up to 50%. According to the company, the prototypes produced so far have shown promising performance in terms of range, charging times and safety.