VW Creates New Company for EV Battery Production

• Volkswagen creates new European company to manage all aspects of EV battery production, starting from processing raw materials to recycling old batteries.

• The automaker will build six gigafactories in Europe, including in Germany, Sweden, and Spain, by the end of the decade.

• VW has recently launched a battery research and development lab in Salzgitter, Germany, which will also be the site of one of the gigafactories, scheduled to open in 2025.

Earlier this month Volkswagen launched a separate European company that will concentrate on all activities that involve EV batteries, from developing new battery tech to processing raw materials and manufacturing the batteries themselves in several gigafactories in Europe. The move is intended to centralize and strengthen the automaker's efforts when it comes to power supplies for its vehicles, as a part of its goal of becoming the world's leading EV maker.

As a part of this company, the automaker plans to create six gigafactories in Europe with the first, in Salzgitter, Lower Saxony, expected to come online in 2025, with 2 billion euros set aside for its construction. This gigafactory is projected to have an annual capacity of 20 gigawatt hours, and is later planned to double that capacity to 40 gigawatt hours. The Salzgitter site has already been announced to house the automaker's battery research and development center, as well as a battery recycling plant, with Volkswagen now planning to add a production base to the development and planning set to take place there.

"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."

The second gigafactory will be based in Skellefteå in northern Sweden, with this particular plant set to be built by start-up Northvolt AB, in which Volkswagen has a 20% stake. This particular gigafactory will produce batteries for the premium automotive segment, and will begin production quite soon, in 2023. Volvo is partnering with Northvolt AB as well, having announced plans to build a battery research and development hub in Gothenburg, Sweden, in partnership with the start-up.

Other VW gigafactories will follow in Eastern Europe and Spain, with locations for the third and fourth gigafactories scheduled to be decided in the first half of 2022, with all six expected to be launched by 2030.

"Volkswagen is forging ahead with the industrialization of battery technology at all levels of the value chain. This week, the company agreed two strategic partnerships with Umicore and 24M as well as a long-term supply agreement with Vulcan Energy Resources," the automaker added earlier this month.

The creation of a standalone company comes amid a redoubling of efforts aimed at expanding the EV lineup in the mid-term and preparing for a future in which most of the automaker's vehicles will be electric. Just a few days ago, during its latest planning round, Volkswagen committed approximately €89 billion ($100 billion) to EV development in the coming years, and it plans to convert more of its current factories to EV production, including its historic Wolfsburg plant.