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The Volkswagen Group (VW) announced that it is expanding its global operations into the battery manufacturing sector, with a new plant to be built in Salzgitter, Germany. This facility, the first of a total of six it plans to build on European soil.


The new chapter in VW's history will be managed by a new company, PowerCo, which was created by VW itself to focus exclusively on the battery business. PowerCo will be responsible for everything in terms of the supply chain, from sourcing the raw material, processing it or manufacturing the batteries to selling the finished products to recycling the old cells. PowerCo will also be responsible for developing the new plant in Salzgitter and expanding production to new facilities in Europe and North America. The new company plans to invest €20 billion over the next eight years to develop the infrastructure of the new plants and their surrounding areas. It is estimated that it will employ at least 20,000 people across Europe however this number is expected to increase with the opening of its factories in North America.


PowerCo will take over the entire management of this international new Volkswagen business and will also be responsible for the development of new battery technologies, essentially following the example of Tesla, with the vertical integration of all activities, from the utilisation and processing of materials, manufacturing machinery and factory equipment to finished products. The company has already drawn up plans to build energy storage systems for the power grid industry.


After the Salzgitter plant, PowerCo is expected to build a new large plant (Gigafactory) in Skelleftea, Sweden. The Volkswagen group has already invested €500 million in the partnership with Nortvolt and holds 20% of the company's shares. The first batteries from the factory being built in Sweden are due to reach the market in 2023. Since 2019, VW has invested around €1.4 billion in this new plant. Later, the company plans to build a new plant in Valencia, Spain. As for the Salzgitter plant, it's worth mentioning that this town in southeastern Lower Saxony, Germany has a long history with VW, as the K70 four-door sedan has been built there since July 1970. Engines for Audi and VW cars were also built there as from 1975 the plant was rebuilt to concentrate on engine production and it was here that the first TDi engine was produced in 1989, and the well-known VR6 engine from 1991. The beastly W16 engine for Bugatti vehicles is also built there.


The new battery plant in Salzgitter will create an additional 5,000 jobs in the region and retain all existing employees. All new PowerCo plants will be built to the same standards to remain flexible and adaptable to new technologies. Each plant will be powered by electricity from renewable sources utilising a closed loop recycling cycle.

PowerCo will use single prismatic cell architecture in its batteries, which allows the use of different chemical elements and is 50% cheaper to manufacture/produce. The cells will be manufactured from 2025 and production is expected to reach 40 GWh sufficient to power 500,000 electric vehicles. By 2030, PowerCo plans to have all six of its plants on European territory in operation with total production reaching 240 GWh.   

As it turns out, VW, one of the world's largest automakers, is not going to sit back and watch the market fall all in the hands of Tesla, and intends in the next few years to outpace the competition.


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