Batteries instead of cylinders – VW leads its main combustion engine factory into the new era. In Salzgitter, things are now getting serious about supplementary battery cells, and the chancellor is also coming.
If you are looking for a place where the upheavals in automotive engineering can be seen particularly drastically, Salzgitter is definitely a top favourite.
Volkswagen chose the steel and industrial city in south-eastern Lower Saxony to install a center for the European production of battery cells here – right next to the existing engine plant, from which many group brands have been getting petrol and diesel drives for decades. A stage begins on Thursday that is of great importance for the second largest group of cars. And this could go far beyond VW and Europe.
Diess: “Milestone for Germany as a location”
They quickly have some of the usual superlatives ready for the laying of the foundation stone. CEO Herbert Diess speaks of a “milestone for Germany as a location”, the opening break is hip “Mission SalzGiga”, once again the industry whispers about a “lighthouse project”. But in fact this day – apart from all sorts of technical pathos and marketing jubilation – marks a decisive step.
Because Volkswagen’s first German “Gigafactory”, as the factory is called in reference to its arch-rival Tesla, stands both for the dawn of mass electric production and for the relatively late awakening of car manufacturers to counter the dominant battery powers, especially from Asia. So far the dependency is high. The fragile global supply chains for chips and raw materials such as lithium or cobalt are also a reason why Europe’s economy wants to focus more on domestic resources. This was recently pointed out by German industry and the federal authority BGR.
E-mobility and traffic turnaround
Chancellor Olaf Scholz and Lower Saxony’s Prime Minister Stephan Weil (both SPD) are likely to address the strategic role played by e-mobility and the turnaround in traffic in Salzgitter. Diess, CTO Thomas Schmall and head of the works council Daniela Cavallo have also announced their attendance. There will be less smell of metal and machine oil in the cell complex. Instead, there are clean rooms and automated systems that are more reminiscent of a mix of chip factory and chemical laboratory.
As many employees as possible should be further qualified from classic engine construction for battery cell and module production. But it is also not easy to attract enough additional experts from outside. For some time now, VW has been operating a pilot line in which homemade battery cells for test series are already being produced.
A research center is docked, and in the future a large part of the battery business is to be controlled from the main region. Based on a total electrical energy of 20 gigawatt hours (GWh) from 2025, an annual amount of 40 GWh is targeted in Salzgitter in several steps. It’s about the “unit cell” – a type that is not intended for upper class models, but for cheaper ones and should be produced more cheaply thanks to large volumes.
Six factories by 2030
Volkswagen will build six such factories across Europe by 2030, each of which should be able to equip around half a million electric cars a year. Construction is already underway in Skellefteå in northern Sweden, where Northvolt started. The Swedes are also setting up their own cell plant in Schleswig-Holstein. Besides Salzgitter, VW itself has named Valencia in Spain. The other three places are still open, there are interested parties from Germany and Eastern Europe.
The entire cell network is expected to create five-digit jobs on the continent. Diess almost seems to enjoy the political show before deciding on the next factories. One could “hardly save oneself from applications”. He explained to the workforce: “From the procurement of raw materials to battery recycling, we want to keep everything under control.” External customers such as the US car manufacturer Ford or Mahindra in India are also to be supplied with electric platform technology. An IPO of the VW battery division could follow.
In addition, the group forms a subcontractor that is responsible for research, raw material purchasing and the development of plant concepts, among other things. Together with Bosch, VW wants to equip complete standard factories. Further plans are also being pushed forward for the USA.
However, some people question whether the currently estimated figures are sufficient if e-mobility is to achieve a breakthrough. “In addition to the urgent expansion of the charging infrastructure, a significantly broader product range in the entry-level segment is necessary,” says Marcus Hoffmann from the consulting firm PwC Strategy
E-small cars from 2025
Much remains to be done here and there. The small e-cars for 20,000 euros that climate protectors are missing should come from 2025, so far the VW brands have offered pure electric vehicles preferably in the upper, middle or, at best, upper compact segment. An ID.2 in Polo format is being discussed.
Stefan Reindl, Director of the Institute for the Automotive Industry (IfA) in Geislingen, like some VW voices, points out that the pace of capacity expansion should not slow down now. Mercedes, BMW and Opel are also investing in high-performance car batteries in Germany. However, the degree of personal initiative as well as the participation and financing models are different.
Reindl estimates that if you aim for a good 600,000 domestic sales and around 3 million e-cars produced in Germany alone in 2025, then a proportionate amount of energy of just over 220 GWh could be sufficient. In the time after that, a lot will have to follow: “In the long-term perspective, more than 600 GWh would be possible according to the available data.” So the investments are huge. But he thinks the risk should be taken by the providers.
After all, the hunger for battery cells is increasing worldwide, emphasizes the IfA boss: “Overall, additional production facilities are necessary to cover the demand, which is growing relatively dynamically.” Not to mention learning effects and new work for the new car era.