Volkswagen takes on US, China rivals with battery factory

BERLIN

Volkswagen celebrated the beginning of work on its first in-house battery factory, as the German auto giant looks to head off competition from U.S. and Chinese electric vehicle upstarts.

The firm plans to “steer the worldwide battery offensive” from the new plant in Salzgitter in central Germany, CEO Herbert Diess told a ceremony on July 7 attended by German Chancellor Olaf Scholz.

Volkswagen has set itself the ambitious aim of becoming the world’s biggest electric car manufacturer by 2025, pouring a total of 46 billion euros ($46.8 billion) over the next five years into the drive.

The Salzgitter complex, where currently thousands of combustion engines roll off the factory line every day, is set to be the centre of Volkswagen’s electric ecosystem.

Two billion euros are being invested in the battery plant through 2026, with the potential for the site to turn out batteries for 500,000 vehicles a year.

The plan will also serve as a blueprint for a fleet of battery plants in Europe.

Up until now both legacy carmakers like Volkswagen have largely relied on Asian, notably Chinese, battery makers to fit their vehicles.

Volkswagen’s new PowerCo unit plans to invest more than 20 billion euros together with partners, with the aim of generating annual sales in excess of 20 billion euros and employing up to 20,000 people in Europe alone.

Around 5,000 will be employed in Salzgitter.