Volkswagen starts building the first of six battery gigafactories

Enlarge / A VW worker dismantles an electric vehicle battery pack for recycling. (credit: Volkswagen)

Volkswagen Group announced on Thursday that it is consolidating its battery development and production in a new project called Mission SalzGiga. The name refers to Salzgitter in Germany, where VW has built more than 63 million internal combustion engines—it has now broken ground on a massive new battery factory at the site, the first of six planned for Europe. Each plant should be able to accommodate an annual production capacity of 40 GWh, sufficient to power 500,000 electric vehicles.

To that end, the company has set up a new Salzgitter-based business unit called PowerCo that will cover all of the automaker's global battery activities. VW says it will require more than $20.4 billion (20 billion euros) in investment between now and 2030 but with an equal potential in revenue, plus the addition of 20,000 new jobs.

"In building our first in-house cell factory, we are consistently implementing our technology roadmap," said Thomas Schmall, VW board member in charge of technology. "PowerCo will become a global battery player. The company'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 in-house and will gain a strategic competitive advantage in the race to take the lead in e-mobility."