Volkswagen enters EV battery business with €20bn investment in PowerCo

July 11, 2022 Editor

Volkswagen battery deep dive — Ceremonial start of construction for the cell factory in Salzgitter (left to righ: Frank Blome, CEO PowerCo, Daniela Cavallo, Chairwoman of the Group Works Council Volkswagen AG, Stephan Weil, Prime Minister of Lower Saxony, Herbert Diess, Chairman of the Board of Management of Volkswagen AG, Olaf Scholz, Federal Chancellor, Thomas Schmall, Member of the Volkswagen AG Board of Management for Technology and Chairman of the Board of Management at Volkswagen Group Components, Hans Dieter Pötsch, Chairman of the supervisory Board of Volkswagen AG). Courtesy of Volkswagen.

Volkswagen Group has announced a new company PowerCo, which is set to invest more than €20 billion ($20 billion) in the Group’s global battery activities.

The announcement, made in the presence of German Chancellor Olaf Scholz, saw the German motor vehicle manufacturer delegate responsibility for the global battery business to the newly created company “PowerCo”.

The global player also announced construction on their first EV battery cell factory in Salzgitter.

In addition to cell production, 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 ($20 billion) together with partners to generate annual sales in excess of €20 billion and to employ up to 20,000 people in Europe.

German Chancellor Olaf Scholz said with regard to the ceremony: “Today is a good day for the automotive industry in Germany and Europe. Volkswagen is showing how the future of sustainable, climate-compatible mobility could look. Together, we are laying the foundation for shaping this future to a significant extent in Salzgitter.“

Herbert Diess, CEO of Volkswagen AG, added: “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.”

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Battery cell factory

With battery production set to start in 2025, the announcement ceremony saw the Group present the concept of the standard factory for the first time.

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

“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 standardising on the basis of European standards and upscaling. This way, we will combine speed and cost optimisation with the highest quality levels“, stated PowerCo CEO Frank Blome.

Each factory will be operated 100% on electricity from regenerative sources and will be designed for future closed-loop recycling.

PowerCo global battery activities

The new company will be taking responsibility for the Group’s bundled global battery activities.

They will manage international factory operations, cell technology development, vertical integration of the value chain and the supply of machinery and equipment to the factories. They have also stated plans for further products such as major storage systems for the energy grid.

The Minister-President of Lower Saxony, Stephan Weil, said about the announcement: “At Salzgitter, we can see the transformation of the automotive industry more clearly than at any other location in Germany.

“Battery cells are soon to be produced where conventional engines are still rolling off the production line. Jobs for the future are being created here. The heart of the automotive industry will be electric in the future.”