Volkswagen starts battery production in Salzgitter, initially for VW ID. Polo

The battery cell manufacturer PowerCo SE, founded by Volkswagen in 2022, today successfully produced its first standard cells at its Salzgitter battery factory as planned. The self-developed and produced cells are intended to make Volkswagen financially and technologically more independent from purchased storage. Starting next year, the batteries will be installed in cars of Volkswagen's “Electric Urban Car Family,” meaning in the VW, Skoda, and Cupra brands. However, complete independence from suppliers in this area is not yet planned for now; the goal is to cover approximately half of the in-house demand, as Volkswagen writes today.

Hope for economies of scale

At the same time, all electric cars should be able to use standardized cells to achieve the highest possible “cost advantages and technological flexibility” through economies of scale. At the same time, the battery platform should remain open to common cell chemistries such as lithium iron phosphate (LFP) and nickel-manganese-cobalt (NMC), as well as new developments, such as in the field of solid-state cell technology. This is significant given that batteries currently account for around 35 percent of the cost of a battery-electric car, but they mostly originate from Asian production.

The batteries that have now gone into production at the site of the former VW engine plant – still on a trial basis – are based on NMC cell chemistry, currently the most powerful and fastest-charging technology used in mass-produced vehicles, but are intended to offer a ten percent increase in energy density. The first batches will be installed in the electric compact cars VW ID. Polo and Cupra Raval, which are scheduled to be built in Spain starting next year. Standard cells based on LFP technology are expected to follow soon. So far, Volkswagen has already invested over one billion euros.

Up to 200 GWh per year

Salzgitter is set to become Europe's leading battery hub. Production there is scheduled to ramp up slowly from a few hundred cells per day in 2026 to 600,000 to 700,000 cells per day, initially reaching an annual production capacity of up to 20 gigawatt-hours (GWh). This would be enough to equip 250,000 e-cars. Later, production volume can be increased to up to 40 GWh if needed. In parallel, PowerCo is building factories based on the same model in Valencia, Spain, and St. Thomas, Canada. They are scheduled to go into operation in 2026 and 2027.

In total, the three cell factories are expected to achieve a production volume of up to 200 GWh per year. Volkswagen intends to adapt the expansion to demand. Any additional demand will initially be covered by the market, which is pricier than in-house production but cheaper than overcapacity.

Volkswagen promises production that is entirely powered by renewable energy, even in the energy-intensive cleanrooms and dry rooms. Thus, the Salzgitter plant is expected to emit up to 115,000 tons less CO₂ annually compared to a conventionally powered plant using fossil fuels.

(fpi)