The supply chain issues of the past couple of years, and the war in Ukraine more recently, disrupted access to everything from base commodities to wiring harnesses for automakers. Now, forward-thinking carmakers entering the EV market are looking at the fragile supply chains that deliver their electric batteries and planning to seize control of them directly. The first step has been securing stocks of the rare-earth metals used for making the batteries. But the second step has been setting up their own research, development, and manufacturing of batteries for their EVs.
In Salzgitter Germany on Thursday, Volkswagen held the groundbreaking at the location of their new EV battery plant, and announced the company was forming a new company called PowerCo, devoted entirely to handling all of Volkswagen’s EV battery activities.
During the event, German Chancellor Olaf Scholz said, “Today is a good day for the automotive industry in Germany and Europe. Volkswagen is showing how the future of sustainable, climate-compatible mobility could look. Together, we are laying the foundation for shaping this future to a significant extent in Salzgitter.”
PowerCo will handle a variety of different responsibilities as the center of Volkswagen’s battery operations. It will conduct R&D on new battery technology, handle manufacturing, and even expand the technologies out into other, “products such as major storage systems for the energy grid,” according to the announcement.
PowerCo already has plans to expand beyond the Salzgitter plant, as well. As soon as it is operational, work will begin on construction of another plant in Valencia, Spain. After that there are three more facilities already planned in Europe, and more, even in North America, that are being contemplated.
Each European factory will be designed to operate off of 100% renewable energy. Plans are for a total of six facilities in Europe capable of producing up to 240 GWh of battery capacity per year. That is enough batteries to power about six million electric vehicles. With that level of capacity Volkswagen should be able to easily meet its stated goal of having half of its product lines be electric vehicles.
The plan is for every PowerCo production facility to be constructed from a standardized model that is carefully designed to be maximally efficient and so that everything can be readily adapted to future “product innovations.”
The Salzgitter plant will employ about 5,000 workers when it becomes operational in 2025, starting at a yearly capacity of 40 GWh (enough to supply roughly 500,000 electric vehicles with batteries). The other factories are expected to generate about 20,000 more positions Volkswagen will need to fill once they are operational.
As the Electric Vehicle wave sweeps over the auto industry clearly Volkswagen is planning to be ahead of the curve when it comes to battery supply.
Volkswagen rose 5.19% to 13.57 at Friday’s close.