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Volkswagen to invest USD 20 bn in car battery business

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Volkswagen to invest USD 20 bn in car battery business

Volkswagen and its allies will invest more than USD 20 billion in the battery cell business, creating 20,000 jobs and aiming for more than USD 20 billion in annual sales by 2030 as it seeks to beat US rival Tesla which is leading the market.

VW’s PowerCo unit will manage projects ranging from its battery production and mining to recycling, including research and energy storage systems, the carmaker said at an important ceremony for its first European battery cell factory in Salzgitter, Germany’s Lower Saxony region. “The future of mobility will once again be in Salzgitter,” German Chancellor Olaf Scholz said at the opening of the battery plant on Thursday.

The factory’s name, “Salzgiga”, is a nod to a rival to Tesla’s “Gigafactory”, which recently opened near Berlin. VW has said that the goal of its project will be to help the company catch up with Tesla and eventually outperform Tesla. “Not so long ago, many Germans thought: We can get batteries from Asia. Today, we know better. The pandemic on Ukraine and Russia’s brutal attack makes it clear that the dependence on global supply chains means a huge risk,” Scholz said.

The Battery Cell project envisions the construction of six plants in Europe, of which the Salzgitter is the “blueprint” for VW’s future standardized production facilities, and two in North America. Volkswagen has repeatedly stated that making enough batteries to power all cars is the biggest challenge in the transition to electric vehicles and has drawn up plans to build factories with a combined capacity of 240-gigawatt hours (GWh) by 2030.

“The car remains the core of our business, but it will be the most complex digital product in the world when it goes electric and autonomous, making us software developers and battery makers,” chief executive Herbert Diess told the same news release. At the ceremony, Volkswagen also presented the standardized battery cell announced in 2021, to be used by up to 80% of the group’s models.

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