On Thursday, Volkswagen officially opened the so-called SalzGiga — VW’s battery factory in Salzgitter, Germany, which will serve as a hub for global battery manufacturing and vertically integrated battery supply chain activities.

At the same time, VW also formalized the name of a separate startup called PowerCo, which will create and control these plants.

Salzgitter will be the blueprint and starting point for what VW calls a “global battery offensive,” including six cell factories in Europe plus “the prospect of new factories in North America in the near future.”

Volkswagen Salzgitter electric car production plant

According to VW, the facility alone will support more than 20,000 “future-proof” jobs and will be supported by a fleet of suppliers. Salzgitter will increase capacity to 40 GWh — enough for around 500,000 electric vehicles — while PowerCo’s plan for Europe includes six additional plants and a total capacity of 240 GWh by 2030.

SalzGiga will produce the new prismatic format of the unified VW cell shown on VW Energy Day in March 2021, which will eventually be installed in 80% of the VW Group’s electric vehicles by the end of the decade. It will be used starting in 2025. With the Electric Day announcement, VW has turned to battery cells rather than the unit itself as a core competency, pursuing a Cell2Pack strategy in which cells are placed directly in the unit rather than grouped into modules.

VW Power Day - battery mix

VW Power Day – battery mix

VW Power Day - battery types

VW Power Day – battery types

VW Power Day - battery types

VW Power Day – battery types

Part of VW’s goal with PowerCo is to reduce battery costs by up to 50%. To get there, PowerCo is investing more than $20.4 billion (€20 billion) with long-term goals of achieving more than that amount in annual sales.

A new cell format that is part of the next generation of Volkswagen Scalable Systems Platform (SSP) for Electric Vehicleswill be rolled out across all VW Group brands and is set to debut in a model planned for 2026. The element will be produced with “green” electricity, VW says, and the targeted means and standardized format will help achieve a recycling rate of more than 90% within the raw material cycle. All plants will be equipped with the same standardized equipment.

Officials called PowerCo one of the most important startups in German history. Volkswagen may have big plans to accelerate past Tesla to become the world’s number one electric car maker, but to be competitive, it needs to bring cell production domestically. As CEO Herbert Diess stressed, all of the recent supply chain issues have made it imperative for the company and Germany to reduce its dependence on Asia not only for cells, but also for raw materials.

VW Salzgitter cellular complex

VW Salzgitter cellular complex

The plant is being built next to the enterprise where engines were produced until recently. According to VW, 1,000 employees have already been trained in the new battery-related activities. Salzgitter was the place pilot line for the production of battery cells and cell building experience since 2019.

Germany and the EU understand the importance of maintaining the supply chain. In addition to the European Battery Alliance, founded by the European Commission in 2017, a European Battery Union Launched in 2019, the company aims to conduct collaborative research and help consolidate raw materials and recycling, while focusing on German automotive craftsmanship.

However, the push to expand the battery supply chain in all aspects cannot come soon enough. In 2017, VW’s head of research and development estimated that the equivalent of 40 Tesla gigafactories might be needed feed the entire industry by 2025as well as prevent battery shortages to meet the volumes then expected by VW.

Now that VW has at least one gigafactory of its own planned for this period, PowerCo will effectively support VW’s ambitions and determine how quickly it can build its energy base.


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