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Volkswagen has announced that it will invest more than €20 billion in a battery cell business, along with partners. 

The newly created PowerCo company will be responsible for the global battery activities of the VW Group.

Based in Salzgitter, around 30 miles southwest of VW’s Wolfsburg headquarters, the new company will manage international factory operations, further development of cell technology, the vertical integration of the value chain, and the supply of machinery and equipment to the factories.

PowerCo is also planning to produce further products such as major storage systems for the energy grid in the years to come. 

VW hopes that the PowerCo will begin producing battery cells in 2025 and provide up to 20,000 jobs across Europe alone. Annual sales targets are “in excess” of €20 billion.

“Today we are not only laying a foundation stone but also marking a strategic milestone,” said Herbert Diess, VW’s CEO.

“The battery cell business is one of the cornerstones of our NEW AUTO strategy which will make Volkswagen a leading provider of the sustainable, software-driven mobility of tomorrow. Establishing our own cell factory is a megaproject in technical and economic terms.”

Following the completion of the Salzgitter site, another cell factory will be established in Valencia and the company is already exploring the possibility of further gigafactories in North America.

The Salzgitter site, however, will serve as the “blueprint” for cell factories throughout Europe and “will set new standards in terms of sustainability and innovation.”

“What we have put to the test millions of times over with vehicle platforms such as the MQB and MEB will also lay the foundation for establishing cell production: we will be standardising on the basis of European standards and upscaling. This way, we will combine speed and cost optimisation with the highest quality levels,” said PowerCo CEO Frank Blome.

Standardisation will cover equipment, buildings, and infrastructure as well as products, processes, and IT. PowerCo says that this will allow factories to be created rapidly and allow them to be converted for further production and production innovations. Each factory will be operated 100% on electricity from regenerative sources and will be designed for future closed-loop recycling.

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