VW has announced another major battery investment, this time committing €20 billion towards battery production through 2030 with a new battery production spin-off called “PowerCo”.
The announcement came at the groundbreaking ceremony for the new battery factory in Salzgitter, Germany, the first of six plants in Europe to be unveiled at VW’s “Power Day” last March.
According to VW, “PowerCo” has the potential to eventually generate annual sales of up to 20 billion euros.
VW expects its battery factories will eventually employ up to 20,000 people across Europe. The first plant in Salzgitter will employ up to 5,000 people, with cell production starting in 2025. The plant will eventually reach an annual production capacity of 40 GWh, enough for around half a million electric vehicles per year.
After Salzgitter, VW is planning another plant in Valencia, Spain, and locations are being evaluated for the remaining plants, including the possibility of plants in North America. Each facility will produce 40 GWh of batteries per year for a total of 240 GWh.
The systems are operated with 100% renewable electricity. Each facility will be designed to have on-site closed-loop recycling systems, allowing for the recovery of up to 90% of the raw materials from battery packs at the end of their life.
VW is developing a unified prismatic cell for use across its model line, which it talked about at its Power Day event. The plan is to reduce battery costs by about 50% to “well below” $100/kWh starting today.
The unitary prismatic cell from VW
Despite VW’s large battery investments, the range for the current vehicles remains limited. All of VW’s EV production for 2022 has essentially sold out, meaning most buyers will have to wait until next year to get one. Demand for electric vehicles is incredibly high right now and supply has not increased in line with demand amid supply disruptions around the world due to the ongoing COVID-19 pandemic. The recent global rise in gasoline prices has added more fuel to the fire (no pun intended) and shown even more people the benefits of electric vehicles.
While Voltswagen leads the industry in capital commitments in battery and electric vehicle production, many other automakers are also investing heavily in battery cell production. But all these battery factories will take some time to get online. So it’s likely to take some time before the EV supply shortages are reversed, and as Seth recently suggested, EV supply may remain limited for the foreseeable future.
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