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Gigafactory and PowerCo: SalzGiga, the Volkswagen Group's battery hub

7.7.2022
Gigafactory and PowerCo: SalzGiga, the Volkswagen Group's battery hub

Sustainable batteries for sustainable e-mobility: this is the goal of the Volkswagen Group, which officially kicked off Mission SalzGiga. In addition to the gigafactory, where unified cells for the volume segment will be produced starting from 2025, Salzgitter will host the headquarters of PowerCo - the Group's new company for the battery business - an R&D center, a pilot line, a test area, the recycling line, and a training center.

"Today is a good day for the automotive industry in Germany and in Europe", said German Chancellor Olaf Scholz at the groundbreaking ceremony for the gigafactory in Salzgitter.

"The Volkswagen Group is showing how the future of sustainable, climate-compatible mobility could look like. Together, we are laying the foundation for shaping this future to a significant extent in Salzgitter".

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German Chancellor Olaf Scholz

PowerCo and the battery business

The battery, or the heart of the electric car; a strategic component with enormous potential in terms of competitive advantage: this is the vision of the Volkswagen Group, which decided years ago to take on the necessary expertise to start in-house production. Now the vision is further realized with the start of the construction of the Group's first cell factory, where production will begin in 2025. And, for optimal management of all activities related to the battery business, along the entire value chain, a European company has been created: PowerCo, which will also be based in Salzgitter.

In addition to cell production, PowerCo will be responsible for international factory operations, the further development of cell technology, the vertical integration of the value chain, and the supply of machinery and equipment to manufacturing plants. Up to 2030, PowerCo is to invest more than 20 billion euros together with partners in the development of the business area, to generate annual sales of more than 20 billion euros, and to employ up to 20,000 people in Europe (including 5,000 in Salzgitter alone), making it a global player in the field of batteries.

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One more step towards NEW AUTO

"Today we are not only laying a foundation stone here in Salzgitter, but also marking a strategic milestone", said Herbert Diess, CEO of the Volkswagen Group. "The battery cell business is one of the cornerstones of our NEW AUTO strategy, which will lead us to become a leading provider of sustainable, software-driven mobility. Establishing our own cell factory is a megaproject in technical and economic terms and shows that we are bringing leading-edge technology of the future to Germany".

"In building our first in-house cell factory, we are consistently implementing our technology roadmap", reiterated Thomas Schmall, Member of the Volkswagen Group Board of Management responsible for Technology and Supervisory Board Chairman of PowerCo. "PowerCo's major strength will be vertical integration, from raw materials and the cell right through to recycling. In future, we will handle all the relevant activities internally and will gain a strategic competitive advantage in the race to take the lead in e-mobility. We have secured a top team for this great undertaking".

Gigafactory in Europe and, in the future, North America

The Volkswagen Group's plans are well known: by 2030 it plans to start operations at six gigafactories across Europe, in cooperation with partners, with a total capacity of 240 GWh per year. After Salzgitter, which when fully operational will have an annual capacity of 40 kWh – enough for about 550,000 electric vehicles - will be the turn of Valencia; at the moment PowerCo is working on identifying locations for three more production sites in Europe and evaluating the possibility of building additional gigafactories in North America.

Gigafactory in Europe and, in the future, North America

Standardization and unified cell

Two aspects are key to rapid growth: standardization of factories and the unified cell. Salzgitter will be the blueprint for the next cell factories; standardization will not only cover equipment, buildings, and infrastructure, but also products, processes, and IT. With this approach, at a later date factories can rapidly be converted for further product and production innovations.

Each factory will be operated 100% on electricity from renewable sources and will be designed for future closed-loop recycling. The unified prismatic cell was also previewed at the Salzgitter event: announced at Power Day in 2021, it will harness synergies and cut battery costs by up to 50 %. The cell allows the flexible use of a raft of different cell chemistries and will be used in up to 80% of all Group models, with clear benefits in terms of economies of scale. Unified cells for the volume segment will be produced at the Salzgitter gigafactory starting in 2025. The prototypes produced to date have demonstrated highly promising performance in terms of range, charging times and safety.

Standardization and unified cell

Ecological and social transition

The Volkswagen Group's focus in developing the unified cell is on sustainability: it will be produced with green electricity from renewable sources and will have a recycling rate of more than 90%, as part of raw materials cycle. In parallel, the company's commitment is to the social aspect of the transition to e-mobility - and with SalzGiga it is also sending an important signal in this regard.

"We are creating, at the heart of Europe, a new future-oriented segment and up to 20,000 future-proof jobs, including 5,000 in Salzgitter alone", explained Daniela Cavallo, Chairwoman of the General and Group Works Council of Volkswagen Group. "Our heartfelt commitment and responsibility for the transformation of our proud engine plant and exemplary retention of secure jobs for its employees continues. This principle remains one of our guiderails, just as it has been in the furure-oriented area of the battery from a very early stage; as a result of this efforts, we now have a showcase for ecological and social transformation". The Salzgitter hub will include, in addition to the gigafactory and PowerCo headquarters, an R&D center, a pilot line, a test area, the recycling line, and a dedicated training center.

VGI | Responsible OU: VP | Creation date: article date | Class 9.1

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