Volkswagen on Thursday celebrated the start of work on its first battery factory as the German auto giant looks to fend off competition from US and Chinese electric vehicle newcomers.
From the new plant in Salzgitter in central Germany, the company wants to “steer the global battery offensive,” said CEO Herbert Diess at a ceremony attended by Chancellor Olaf Scholz.
Volkswagen has set itself the ambitious goal of becoming the world’s largest manufacturer of electric cars by 2025 and investing a total of 46 billion euros (46.8 billion US dollars) in the drive over the next five years.
“If Germany and Europe don’t want to be left behind by the USA and China, we have to focus more on the technologies of the future,” said Diess.
The Salzgitter complex, where thousands of combustion engines roll off the assembly line every day, is set to become the center of Volkswagen’s electric ecosystem.
Two billion euros will be invested in the battery plant by 2026, with the potential for the site to produce batteries for 500,000 vehicles per year.
The plan is also intended to serve as a blueprint for a fleet of battery plants in Europe.
– ‘Sustainable, climate-friendly’ –
So far, both legacy automakers like Volkswagen have largely relied on Asian, particularly Chinese, battery makers to outfit their vehicles.
Western auto giants are striving to bring production in-house to minimize supply disruptions and reap the value of battery production.
The “dependence” on distant suppliers has proven to be a “great risk” for the manufacturers, said Scholz, who placed the last unit of a celebratory founding battery.
“Today is a good day for the automotive industry in Germany and Europe,” he said, adding that VW is paving the way to “sustainable, climate-friendly mobility.”
Scholz said Europe’s top economy is aiming to have 15 million electric vehicles on its roads by 2030.
Volkswagen’s new PowerCo unit plans to invest more than 20 billion euros together with partners in order to generate annual sales of over 20 billion euros and employ up to 20,000 people in Europe alone. Around 5,000 are employed in Salzgitter.
According to Diess, Volkswagen is planning to open six plants in Europe together with partners, and another in the USA.
The first, a collaboration with battery manufacturer Northvolt, will open in Sweden in 2023, followed by the Salzgitter site in 2025.
Volkswagen has developed Valencia in Spain as a location for a battery factory, with talks ongoing for additional locations at other existing production sites in Europe.
Main competitor Tesla opened its first European factory outside of Berlin earlier this year. The site in Grünheide is to be supplemented with its own battery plant.
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