The Volkswagen group creates a European company for its battery activity
Volkswagen creates a European company (Société Européenne) to consolidate its activities throughout the battery value chain, from the processing of raw materials to the development of a unified Volkswagen battery, including the management of European gigafactories.
The company’s scope will include new business models based on reusing used car batteries and recycling the valuable raw materials they contain. The Group is thus creating efficient and sustainable structures for the growing battery business.
As part of its NEW AUTO strategy, the Volkswagen Group aims to become the world’s leading manufacturer of electric vehicles. To this end, it is expanding its battery-related activities and making it one of its core competencies.
We want to provide powerful, inexpensive and durable vehicle batteries to our customers, which means we need to be active at all stages of the battery value chain that are critical to success. We are now consolidating our power in Salzgitter, with the aim of encouraging innovation and securing the support of the best partners for our new business in the future. We already have a strong battery team in Salzgitter consisting of 500 employees from 24 countries – and we continue to strengthen this team at management level.
—Thomas Schmall, Technology Board Member at Volkswagen AG and CEO of Volkswagen Group Components
Schmall is responsible for batteries, charging and energy as well as the in-house production of components.
Under the leadership of battery boss Frank Blome, Soonho Ahn will take a leading role in the development of battery cells. After appointments at LG and Samsung, Ahn’s most recent role was as Global Head of Battery Development at Apple. Kai Alexander Müller from Barclays Investment Bank, London will also move to Salzgitter, where he will bring his financial background in the capital market and equity research.
Volkswagen plans to establish six gigafactories in Europe to meet the growing demand for battery cells within the Group. Production of battery cells in Salzgitter is expected to start in 2025. The Lower Saxony gigafactory will produce unified battery cells for the volume segment of the Volkswagen Group.
In its initial phase, the plant should have an annual capacity of 20 GWh; it is planned to double later to reach 40 GWh. Based on the current planning cycle, the Volkswagen Group is investing heavily in the development of battery cell production in Salzgitter. A total of EUR 2 billion was spent on the construction and operation of the Salzgitter gigafactory until production started.
The production of battery cells in Salzgitter is expected to provide jobs for more than 2,500 people in the future. These employees will mainly be employees of the Salzgitter engine plant, who will be retrained in order to take on these new roles. Some of these personnel bring expertise – in planning or logistics, for example – which will be useful for the construction of the plant. Where appropriate, this transfer of know-how will be supplemented by new skills, for example by recruiting external staff.
The Salzgitter site in Lower Saxony will bring together development, planning and production control under one roof, thus becoming the battery center for the Volkswagen Group. There are plans to build additional gigafactories at sites in Spain and Eastern Europe. The exact locations of gigafactories 3 and 4 are expected to be decided in the first half of 2022. Volkswagen intends to open two more battery cell factories in Europe by 2030.
Along with the development of these five gigafactories by the new European company, Swedish start-up Northvolt AB, in which Volkswagen has a stake of around 20%, will build a new plant in Skellefteå, in northern Sweden. This will produce battery cells for the premium automotive segment from 2023. Northvolt has already partnered with the Volkswagen Group in the area of premium battery cells.
Volkswagen is industrializing battery technology at all levels of the value chain. This week the company entered into two strategic partnerships with Umicore and 24M as well as a long-term supply agreement with Vulcan Energy Resources.
The aim of the partnerships is to help manufacture and supply raw materials as well as optimize the manufacture of battery cells in the planned gigafactories. The partnerships are designed to strengthen know-how in battery technology and optimize cost management.
Over the next five years, the Group will invest around 52 billion euros in the development and production of new electric vehicles. The NEW AUTO strategy also covers the development of new areas of activity in batteries, recharging and energy. In addition, the Group is creating dedicated technological platforms that allow inter-brand synergies, including the modular MEB electrical drive matrix and an SSP platform, scheduled for launch in 2026.