Volkswagen Group on Thursday announced the establishment of the new company PowerCo which will be responsible for the automaker's global battery activities going forward.
The announcement was marked with the start of construction of VW Group's first plant for battery cell production, located in Salzgitter, Germany. Salzgitter is where VW Group in 2019 opened a battery cell R&D center.
“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,” Herbert Diess, VW Group's CEO, said in a statement.
Artist's impression of Volkswagen Group battery cell plant in Salzgitter, Germany
PowerCo will be responsible for activities along the entire battery value chain, including battery cell production at Salzgitter and other sites. PowerCo will invest more than 20 billion euros (approximately $20.25 billion) through 2030 and eventually expects to generate that amount in sales annually.
The Salzgitter plant is scheduled to open in 2025. It will have an annual capacity of 40 gigawatt-hours, or enough for about about 500,000 electric vehicles. Via PowerCo, VW Group plans five more battery cell plants in Europe and potentially some in North America, in some cases with partners such as Sweden's Northvolt.
The next location has been confirmed as Valencia, Spain, close to where VW Group plans production of future subcompact EVs. The six European plants are expected to supply annually 240 gwh, and these cells will not only be for vehicle batteries but also energy storage systems, including for the energy grid.
VW Salzgitter cell facility
To help reduce battery costs, VW Group's New Auto strategy calls for the use of a common cell that will be used in roughly 80% of the automaker's lineup. The automaker expects the common cell design to reduce battery costs by as much as 50%. Production of the common cells will begin in 2025. VW Group said prototypes are already delivering promising performance with respect to range, charging and safety.
There will still be unique cell designs for some applications, like high-performance vehicles, which VW Group will develop with partners. In this regard, VW Group brand Porsche is spearheading things.
VW Group is also developing solid-state batteries, which the automaker estimates will boost range by 30% compared to current liquid-state batteries of similar size, and enable an 80% charge in around 12 minutes. VW Group expects to introduce its first solid-state batteries after 2025.