In the wake of efforts to consolidate the electric vehicle production chain, the Volkswagen Group (VWG) has launched the establishment of a battery manufacturing company. The activities of this company will extend to all stages of production, from the processing of raw materials, to the development of a unified Volkswagen battery, to the management of giant European factories. This is a new business model at Volkswagen that involves reusing old car batteries and recycling them to get raw materials from them. Thus, the VW group is not only creating efficient but also stable structures in the battery business which is going through a rapid growth. Based on the NEW AUTO strategy, the Volkswagen Group is aiming to lead the way in the production of electric vehicles globally. In line with this strategic goal, the VW Group is expanding its battery-powered activities and bringing them into line with its core competencies.
Thomas Schmall, Member of the Technology Management Board at Volkswagen AG and Chief Executive Officer of the Volkswagen Group Components, and consequently responsible for batteries, charging and power, as well as for local component production, says: “We want to offer our customers batteries robust, inexpensive and durable for vehicles which means we need to be active at all stages of the battery value chain which determines success. We are now joining forces at Salzgitter, with the aim of encouraging innovation and securing the support of the best partners for our ongoing new company. “We already have a strong team committed to battery life in Salzgitter, consisting of 500 employees from 24 countries – and we are continuing to strengthen this team at the leadership level.”
Under the management of battery chief Frank Blome, Soonho Ahn will take a leading role in the development of battery cells. Following appointments to LG and Samsung, Ahn’s most recent position was as Global Battery Development Manager at Apple. Kai Alexander Müller of Barclays Investment Bank, London, will also move to Salzgitter, where he will contribute his financial experience in the capital market and in capital research.
Volkswagen is planning to build six giant factories in Europe in response to growing demand for batteries within the Group. Battery production at Salzgitter is expected to start in 2025. In the initial phase, the plant is projected to have an annual capacity of 20 gigawatt-hours with plans to double to 40 gigawatt-hours at a later stage. Based on the current plan, the Volkswagen Group is investing heavily in developing battery production in Salzgitter. A total of 2 billion euros has been allocated for the construction and operation of the Salzgitter plant until production begins.
More than 2,500 people are expected to be involved in the production of the batteries in Salzgitter, who will mainly be transferred from the Salzgitter engine plant, after a training they will undergo to be able to perform the new job. Among the staff there are those who come with expertise – for example in planning or logistics – which means less need for training. If the expertise they bring does not cover all positions in the factory the staff will be filled through the recruitment of new staff from abroad.
This plant in Salzgitter, Lower Saxony, will develop, plan and control production, all three in one place, and thus the plant will become the battery center of the Volkswagen Group which is making plans to build other plants as well. giants in Spain and Eastern European countries. However, until the first half of 2022, it will not be known exactly in which countries the third and fourth factories will be located. By 2030 Volkswagen aims to open two more battery factories in Europe.
In parallel with the development of these five giants, Swedish start-up Northvolt AB – in which Volkswagen holds about 20 percent of the shares – will build a factory in Skellefteå in northern Sweden. Starting in 2023 this plant will produce batteries for the premium automotive segment. Northvolt and the Volkswagen Group are longtime partners in the field of premium batteries.
GVW recently entered into a strategic partnership agreement with Umicore and 24M, as well as a long-term supply agreement with Vulcan Energy Resources. Partnerships serve to develop knowledge in battery technology and optimize cost management.
With these actions Volkswagen is leading the industrialization of battery technology at each of the value chain levels. The Volkswagen Group is implementing comprehensive electrical strategies in the global automotive industry. Plans to invest about 52 billion euros over the next five years in the development and production of new electric vehicles include areas