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  • Writer's pictureNATALIA SOUSA

Volkswagen Group creates European company for its battery business

Volkswagen has announced that it has established a European company (Société Européenne) to consolidate activities along the battery's value chain. The new company will process raw materials, develop a unified Volkswagen battery, and manage the European giga-factories. The company's scope will include new business models based around reusing discarded car batteries and recycling the valuable raw materials they contain.

"We want to offer our customers powerful, inexpensive and sustainable vehicle batteries, which means we need to be active at all stages of the battery value chain that are critical for success. We are now bundling our power in Salzgitter, intending to encourage innovation and secure the support of the best partners for our new company going forward. We already have a strong battery team in Salzgitter made up of 500 employees from 24 countries – and we are continuing to strengthen this team at the leadership level." Said Thomas Schmall, member of the Board of Management for technology at Volkswagen AG and CEO of Volkswagen Group Components,

Under the management of battery boss Frank Blome, Soonho Ahn will take on a leading role in developing battery cells. Following appointments at LG and Samsung, Ahn's most recent post was as Global Head of Battery Developments at Apple. Kai Alexander Müller of Barclays Investment Bank, London, will likewise switch to Salzgitter, contributing his financial experience in the capital market and equity research.

Volkswagen plans to establish six giga-factories in Europe to cover the growing demand for battery cells within the Group. Battery cell production in Salzgitter is set to start in 2025. The giga-factory in Lower Saxony will produce unified battery cells for the Volkswagen Group's volume segment. In its initial phase, the factory is set to have an annual capacity of 20-gigawatt hours; this is planned to double to 40-gigawatt hours at a later stage.

Battery cell manufacture in Salzgitter is expected to provide jobs for more than 2,500 people in the future. These employees will principally be staff from the Salzgitter engine plant, who will be retrained in order to take on these new roles. The site in Salzgitter, Lower Saxony, will bring together development, planning and production control under one roof, and will thus become the Volkswagen Group's battery centre. There are plans to build additional giga-factories at Spain and Eastern Europe sites. The exact locations for giga-factories 3 and 4 will be decided in the first half of 2022. Volkswagen intends to open two more battery cell factories in Europe by 2030.

Parallel to the development of these five giga-factories by the newly formed European company, the Swedish start-up Northvolt AB, Volkswagen has a stake of around 20 percent, will be building a further factory in Skellefteå in northern Sweden. This will produce battery cells for the premium automotive segment starting in 2023. Northvolt already has an established partnership with the Volkswagen Group in the area of premium battery cells.

Volkswagen is forging ahead with the industrialisation of battery technology at all levels of the value chain. This week, the company agreed on two strategic partnerships with Umicore and 24M and a long-term supply agreement with Vulcan Energy Resources.

The goal of the partnerships is to aid the manufacture and procurement of primary materials and optimise battery cell manufacture at the planned giga-factories.

The Volkswagen Group will be investing around €52 billion in developing and producing new electric vehicles. The NEW AUTO strategy also covers the development of the new business fields batteries, charging and energy. In addition, the Group is creating dedicated technology platforms that enable cross-brand synergies, including the modular electric drive matrix MEB and an SSP platform, due to launch in 2026.

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