Volkswagen starts building the first of six battery gigafactories

Volkswagen Group announced on Thursday that it is consolidating its battery development and production in a new project called Mission SalzGiga. The name refers to Salzgitter in Germany, where VW has built more than 63 million internal combustion engines—it has now broken ground on a massive new battery factory at the site, the first of six planned for Europe. Each plant should be able to accommodate an annual production capacity of 40 GWh, sufficient to power 500,000 electric vehicles.

To that end, the company has set up a new Salzgitter-based business unit called PowerCo that will cover all of the automaker's global battery activities. VW says it will require more than $20.4 billion (20 billion euros) in investment between now and 2030 but with an equal potential in revenue, plus the addition of 20,000 new jobs.

"In building our first in-house cell factory, we are consistently implementing our technology roadmap," said Thomas Schmall, VW board member in charge of technology. "PowerCo will become a global battery player. The company's major strength will be vertical integration from raw materials and the cell right through to recycling. In future, we will handle all the relevant activities in-house and will gain a strategic competitive advantage in the race to take the lead in e-mobility."

Cell production is scheduled to begin at the Salzgitter factory in 2025, and VW says it has already retrained 1,000 employees from making engines. It says the battery factory will add another 5,000 jobs over the next few years.

VW wants to scale up rapidly, so it has standardized the design of the battery factories, which will use green electricity to operate, incorporating the ability to move to closed-loop recycling once the supply of old EV batteries makes that possible. The Salzgitter site will also have facilities for battery research and development in addition to large-scale production and recycling.

The automaker is also moving to a standardized cell format, a prismatic cell first announced in 2021. Although the cell's size and shape are fixed, it has been designed to allow flexibility in terms of cell chemistries, and VW says that 80 percent of its EVs will adopt the unified prismatic cell.

VW says that by 2030, its European battery plants should give it an annual capacity of 240 GWh. In addition to Salzgitter, the company has already identified Valencia, Spain, as the site of the second battery factory and is also looking into building additional battery factories in the US. The company will start building ID.4 crossovers at its factory in Chattanooga, Tennessee, in July; the vehicles will use cells made in Georgia by SK Innovation (European-made ID.4s use LG cells).