Volkswagen strengthens its EV battery supply with $20 billion investment

proposed volkswagen battery plant in Salzgitter
Proposed Volkswagen battery plant in Salzgitter | Volkswagen

Volkswagen is on a drive to redeem its image after the dieselgate scandal and is heavily investing in zero-emission automobiles. Today the automaker announced it is spending $20.38 billion on EV batteries under a new company named Power Co.

The news was released when Volkswagen broke ground at the site of its new battery plant in Salzgitter, Germany.

The new entity will oversee Volkswagen’s effort to secure battery supply as the race for the top EV position heats up. Power Co will generate $20.38 billion in yearly sales and employ 20,000 people globally. It is aiming for a 240 gigawatt-hours per year capacity.

The new company will take over Volkswagen’s battery supply chain entirely and handle the research and development of new battery tech.

Speaking on the importance of batteries to Volkswagen’s EV ambitions, CEO Herbert Diess said, “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!”

Diess has vowed to overtake Tesla in terms of EV production volume, although he maintains a cordial relationship with the CEO, Elon Musk. It is in second place behind Tesla in terms of purely electric cars.

Volkswagen outlined its plans last year to build six new production facilities for batteries in Europe by 2030. The construction of the first one has started in Salzgitter, and the second one will be built in Skelleftea, Sweden. Spain will host the third one in Valencia, while the fourth one will be situated in Eastern Europe. Volkswagen might build battery facilities in North America in the future. It recently started manufacturing the ID.4 EV in the US.

The German automaker will start using the same prismatic cell battery from 2023. It will cover all its brands and equip up to 80 percent of its cars by 2030. Volkswagen will also get batteries from Samsung and CATL.

It has also invested in QuantumScape, a solid-state battery startup.

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