VW Approves Big Investment In Battery Cell Factory

Volkswagen to invest just under €1 billion to set up a battery cell production facility with a partner.

By: Mark Kane

May 13, 2019 at 6:32pm ET

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Volkswagen announced today that the Supervisory Board and Board of Management approved the plan to build a battery plant in Lower Saxony (Salzgitter), Germany.

The planned investment will be just under €1 billion ($1.12 billion), which sounds like one of the biggest gigafactories in the world.

The German manufacturer currently was producing only battery modules and packs, but in the not too distant future, it will be able to produce cells, which means total vertical integration (including recycling also in Salzgitter).

The press release says clearly that the battery cell production facility will be set up with a partner. But who could it be? SK Innovation is first that comes to mind.

"The Supervisory Board and Board of Management of Volkswagen AG took important decisions for the future of the Volkswagen Group today. As part of its electrification offensive the Volkswagen Group is to move forward with setting up a battery cell production facility in Europe under a partnership. To that end, the Supervisory Board approved investments of just under one billion euros at today’s meeting. It is planned to locate a battery cell production facility in Lower Saxony (Salzgitter)."

Supervisory Board Chairman Hans Dieter Pötsch said:

“We approved important strategic decisions for the Volkswagen Group at today’s Supervisory Board meeting. As part of our comprehensive electrification offensive we plan to secure our battery capacities through strategic partnerships. At the same time, we wish to expand our production capacities in Europe to support our growth plans. Given the ever greater complexity of our industry and the related challenges, it is essential to focus on our core business,”.

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Volkswagen CEO Herbert Diess commented said:

“The automotive industry is in the midst of a fundamental transformation, a transformation that we are also vigorously driving forward at Volkswagen. We are pressing ahead with the electrification and digitalization of our fleet like no other automotive company. At the same time, we are building up innovative business areas over the coming years to cater for innovative mobility services. This is about aligning the Volkswagen Group to play a decisive role in shaping the sweeping transformation of our industry. Today’s decisions are important milestones for the future of Volkswagen”.

The Minister-President of Lower Saxony, Stephan Weil, commented:

“Today’s decision by the Supervisory Board marks a breakthrough for battery cell production in Lower Saxony. The production of battery cells is crucial for the Number 1 automotive stronghold. These are positive signals for the Salzgitter location. I am very optimistic that battery cells can be produced in Germany at competitive conditions.”

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Supervisory Board and Board of Management take important decisions for future of Volkswagen Group

Investments of just under one billion euros planned to set up battery cell production facility with partner in Lower Saxony
Volkswagen begins concrete negotiations for a new multibrand plant in Europe
Forward-looking industrial solution for MAN Energy Solutions (ES) and RENK AG to be developed
IPO of TRATON SE planned before 2019 summer break

The Supervisory Board and Board of Management of Volkswagen AG took important decisions for the future of the Volkswagen Group today. As part of its electrification offensive the Volkswagen Group is to move forward with setting up a battery cell production facility in Europe under a partnership. To that end, the Supervisory Board approved investments of just under one billion euros at today’s meeting. It is planned to locate a battery cell production facility in Lower Saxony (Salzgitter). It was also decided to begin concrete negotiations on the planned new multibrand plant in Europe with the remaining potential locations. In addition, the Supervisory Board requested the Board of Management to start the process to develop a forward-looking, industrially meaningful solution for MAN Energy Solutions (ES) and RENK AG. The focus lies on opening future-oriented growth perspectives for mechanical engineering in the Group, for example though a joint venture, partnerships, or a full or partial sale. Furthermore, it was decided to prepare an IPO of TRATON SE to be launched before the 2019 summer break, subject to further market developments.

“We approved important strategic decisions for the Volkswagen Group at today’s Supervisory Board meeting. As part of our comprehensive electrification offensive we plan to secure our battery capacities through strategic partnerships. At the same time, we wish to expand our production capacities in Europe to support our growth plans. Given the ever greater complexity of our industry and the related challenges, it is essential to focus on our core business,” Supervisory Board Chairman Hans Dieter Pötsch said.

“The automotive industry is in the midst of a fundamental transformation, a transformation that we are also vigorously driving forward at Volkswagen. We are pressing ahead with the electrification and digitalization of our fleet like no other automotive company. At the same time, we are building up innovative business areas over the coming years to cater for innovative mobility services. This is about aligning the Volkswagen Group to play a decisive role in shaping the sweeping transformation of our industry. Today’s decisions are important milestones for the future of Volkswagen”, Volkswagen CEO Herbert Diess commented.

The Chairman of the Group and General Works Council, Bernd Osterloh, said: “The employee representatives on the Supervisory Board welcome the decisions, which they expressly support. These decisions set the course for the sustainable further development of secure jobs as well as profitability.”

The Minister President of Lower Saxony, Stephan Weil, commented: “Today’s decision by the Supervisory Board marks a breakthrough for battery cell production in Lower Saxony. The production of battery cells is crucial for the Number 1 automotive stronghold. These are positive signals for the Salzgitter location. I am very optimistic that battery cells can be produced in Germany at competitive conditions.”