Volkswagen Creates New EV Battery Production Company

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【Summary】The German automaker plans to build six gigafactories in Europe by the end of the decade to handle VW’s needs for electric car batteries, including processing raw materials to recycling old car batteries.

Original Vineeth Joel Patel    Feb 08, 2022 7:45 AM PT
Volkswagen Creates New EV Battery Production Company

With so many automakers going all-in on electric cars, batteries are going to be hard to source in the near future. Earlier this year, Volkswagen stated that more than 70 percent of its European sales will come from electric cars by 2030. In other regions, like China and the U.S., the automaker believes that electric cars will account for 50 percent of its sales. To meet these large goals, Volkswagen is going to need a whole bunch of car batteries. Instead of looking to other companies for its needs, Volkswagen recently announced that it will launch a separate European company that will handle all of its battery requirements.

New Battery Gigafactories Are Coming

The new battery company will be in charge of any activities involving a battery for an electric car. This includes processing raw materials to create batteries and recycling old ones. The move is to keep things in-house as much as possible and to help Volkswagen become the leader EV manufacturer in the world. As part of the new battery company, VW will build six gigafactories in Europe, the first of which will be located in Salzgitter, Lower Saxony and will become operational in 2025.

The gigafactory in Salzgitter will have an annual capacity of 20 gigawatt hours when it first goes online, with production set to double to 40 gigawatt hours at a later date. The Salzgitter factory will also be home to the automaker's battery research and development center, along with the brand's battery recycling plant.

"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," said Thomas Schmall, member of the Board of Management for technology at Volkswagen AG and CEO of Volkswagen Group Components. "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."

Why Have Battery Factories?

Volkswagen's second gigafactory will go live in northern Sweden and will be built by start-up Northvolt AB. The German automaker has a 20-percent stake in the start-up, so it makes sense to use its connections for another venture. The gigafactory in Sweden will be in charge of producing batteries for Volkswagen's upscale electric cars and will begin production next year. Other gigafactories will go live in Spain and Eastern Europe. All six locations will be launched before the end of 2030.

Going forward with creating a company that solely focuses on Volkswagen's electric car batteries comes at a time when the German automaker is looking to expand on its EV push. This year's serious supply chain issues have given automakers something to think about – moving operations in-house. Tesla set the standard by investing heavily into battery production at its own facilities and has become a major force in the industry, leading others to follow a similar path.

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