Volkswagen pressures Tesla with the construction of its first battery plant | Economy

German Chancellor Olaf Scholz, in the center, together with the CEO of the Volkswagen Group, Herbert Diess, this Thursday in Saltzigger.
German Chancellor Olaf Scholz, in the center, together with the CEO of the Volkswagen Group, Herbert Diess, this Thursday in Saltzigger.FABRIZIO BENSCH (REUTERS)

The Volkswagen group will convert one of its old combustion engine plants into its first battery cell factory. It will take place in the German town of Salzgitter (Lower Saxony), in what is the second most important step taken by the German consortium in its offensive to dethrone Tesla as the largest manufacturer of vehicles powered solely by batteries starting in 2025. “A new chapter of progress”, said the German chancellor, Olaf Scholz, in a great institutional act that this Thursday marked the starting signal for the construction works of these new facilities.

“Today is a good day for the automobile industry in Germany and Europe,” Scholz pointed out during the ceremony, to which EL PAÍS was invited. The CEO of the Volkswagen group, Herbert Diess, has pointed out that the event was more than “a foundation stone” but above all a “strategic milestone”: “The battery cell business is one of the cornerstones of our strategy”.

The first big step on this electric path was taken by the German manufacturer two and a half years ago, when it launched the assembly of its first family of cars conceived by the brand to be electric: the ID.3. Now, Salzgitter, a city of just over 100,000 inhabitants, becomes another of the great symbols of the metamorphosis that the old automotive industry is undergoing, but also the launch pad and headquarters of a new Volkswagen company — PowerCo—which will be in charge of operating the six plants that the group plans to build in Europe, including the one announced in Sagunto (Valencia).

The new company in the Volkswagen orbit aims to invoice around 20,000 million euros per year from 2030, when it is fully operational. And even before it even starts operating (it will do so in July), it is already a firm candidate to go public. “We are competitive and attractive to the market,” said Thomas Schmall, the man called to be the chief executive of the new PowerCo, at the event. The date on which it will start trading – if it does – is still unknown.

With PowerCo, the German group ensures the manufacture of batteries for its cars – around a third of the cost of an electric vehicle – and the business that may arise from its management. “We do not want to give manufacturing to others,” Diess has pointed out, in a policy that coincides with that of Tesla.

Volkswagen, the second largest vehicle manufacturer in the world (after Toyota), wants to snatch Tesla’s label as leader in the electric segment as soon as possible. Diess, according to public Financial Times, foresees that milestone for 2025, although at the moment the differences between the German group and the Californian brand are considerable. In the first quarter of this year, the US firm sold 310,000 cars (all of them electric, the only ones it manufactures), while the entire Volkswagen group (VW, Audi, Skoda, Cupra and Porsche) sold just over 99,000 cars of that same segment during those first three months of the year. These data, however, were affected by the need to stop some productions due to the Russian invasion of Ukraine. Until now, one of the differences in favor of Tesla is that it has been able to manufacture its own batteries.

The German group is throwing the rest in that battle with Tesla. It plans to invest 52,000 million euros in a business transformation offensive never seen before. And the investment in its gigafactories alone will require around 20,000 million.

The plant will begin construction this year. With an investment of 2,000 million, it will achieve a capacity of 40 gigawatt hours (GWh), and plans to manufacture around half a million batteries a year. It will employ some 5,000 people and from these facilities will come, for example, the batteries that will be installed in the electric cars that leave the Seat plants in Martorell (Barcelona) and the Volkswagen plant in Landaben (Pamplona) from 2025 , waiting for the Sagunto gigafactory to start producing as well. The group also proposes that both the way of producing and the distribution of the facilities can be copied by the rest of the factories that are built, reducing the time needed to start them up.

Salzgitter will be the first switchgear factory fully owned by the German group and the second in its strategy, after the one it is building in Sweden together with Northvolt, a company in which it also holds a stake. The next one will be the Spanish one, while the other of the six planned in Europe are still a question mark regarding its location, although the Eastern EU countries seem to have one assured. The company is also studying the possible construction of similar facilities in the United States.

Daniela Cavallo, president of the works council of the Volkswagen group, has pointed out that the transformation of the old engine plant, in which 6,829 people work, “is a demonstration that the change is not dramatic”, although she has not hesitated to affirm that achieving that future for the squad has meant “hard work”.

In addition to the cell factory, the Volkswagen group will install a hub of decarbonization, in which, in addition to promoting new technologies, it is planned to create a battery recycling center.

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