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Volkswagen and partners to invest $20 billion in car batteries

Volkswagen and its partners are set to invest more than 20 billion euros ($20.38 billion) in a battery cell business, creating 20,000 jobs and targetting yearly sales above 20 billion euros by 2030 as it seeks to defeat U.S. rival Tesla which leads in the sector.

Volkswagen’s PowerCo unit will handle its battery production and research from mining to recycling, and projects consisting of energy storage systems, the automaker said at a ceremony for its first European battery cell factory in Salzgitter, Germany.

“The future of mobility will once again be made in Salzgitter,” German Chancellor Olaf Scholz said on Thursday during the opening of the battery plant.

The name of the factory, “SalzGiga”, is a nod to competing Tesla’s “Gigafactory” which was recently opened near Berlin. VW has said its project would be helping the automaker catch up with and eventually outperform Tesla.

The battery cell project envisions the building of six factories in Europe, of which Salzgitter is the “blueprint” for Volkswagen’s future standardized production facilities, and two in North America.

“The car remains the core of our business, but it will be the world’s most complex digital product when it becomes electric and autonomous, making us into software developers and battery manufacturers,” CEO Herbert Diess said.

At the ceremony, Volkswagen also presented the standardized battery cell it had announced last year which is to be used in up to 80% percent of the group’s models.

“What we have proven a million times over with Volkswagen vehicle platforms: standardizing and scaling up allows for speed and cost optimization with the highest quality,” said PowerCo CEO Frank Blome.

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