Volkswagen Group broke the ground for its first battery cell factory in Salzgitter, Germany and unveiled the prismatic unified cell that will be used in up to 80 percent of its models.
Scheduled to start production in 2025, the new cell plant, nicknamed SalzGiga, is expected to reach an annual capacity of 40 GWh, enough for about 500,000 electric vehicles.
Following Salzgitter, the next cell factory will be established in Valencia, Spain, with VW currently looking at three further sites for future cell factories in Europe. By 2030, the Volkswagen Group intends to operate six cell factories with a total volume of 240 GWh throughout Europe together with partners.
In addition to Europe, the automaker is also exploring the possibility of further gigafactories in North America.
At the ground breaking ceremony, which was attended by German Chancellor Olaf Scholz, Volkswagen Group presented for the first time the concept of the Salzgitter factory, which will act as a blueprint for cell factories throughout Europe, aiming to set new standards for sustainability and innovation.
Gallery: Volkswagen Group's new Salzgitter battery cell gigafactory and new unified cell
"What we have put to the test millions of times over with vehicle platforms such as the MQB and MEB will also lay the foundation for establishing cell production: we will be standardizing on the basis of European standards and upscaling. This way, we will combine speed and cost optimization with the highest quality levels."
PowerCo CEO Frank Blome
According to Volkswagen, standardization will not only cover equipment, buildings and infrastructure but also products, processes and IT. This will enable the company to rapidly convert factories for further products and create production innovations.
Each battery cell factory will be operated 100 percent on electricity from regenerative sources and will be designed for future closed-loop recycling.
PowerCo: new affiliate to manage VW Group's global battery business
The Salzgitter plant and future facilities will be operated by a newly created company called PowerCo. The new entity will take responsibility for Volkswagen Group's global battery business and will oversee both cell production and activities along the entire battery value chain.
PowerCo will operate from Salzgitter and manage international factory operations, the further development of cell technology, the vertical integration of the value chain and the supply of machinery and equipment to the factories.
Up to 2030, PowerCo will invest more than €20 billion ($20.3 billion) together with partners in the development of this business and is expected to generate annual sales in excess of €20 billion and employ up to 20,000 people in Europe, including 5,000 in Salzgitter alone.
"The battery cell business is one of the cornerstones of our NEW AUTO strategy which will make Volkswagen a leading provider of the sustainable, software-driven mobility of tomorrow. Establishing our own cell factory is a megaproject in technical and economic terms. It shows that we are bringing the leading-edge technology of the future to Germany!"
Herbert Diess, CEO of Volkswagen Group
Gallery: Ground breaking ceremony for Volkswagen Group's first battery cell factory in Salzgitter, Germany
To be used in up to 80 percent of all Volkswagen Group models, the prismatic unified cell will allow the flexible use of a raft of different cell chemistries. The Salzgitter plant will produce unified cells for the volume segment from 2025 onwards.
The new unified cell is estimated to reduce battery costs by up to 50 percent, with prototypes produced to date having demonstrated "highly promising performance with respect to range, charging times and safety."