Volkswagen Delays Decision On Eastern Europe Battery Gigafactory

The company cites economic uncertainty and high energy prices, saying it's still evaluating sites for its future cell plant.

Highly automated: manufacturing of the battery systems for the ID.3 and ID.4 at Volkswagen Group Components Braunschweig

Dan Mihalascu

By: Dan Mihalascu

Dec 9, 2022 at 8:30am ET

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Volkswagen Group has announced it is postponing its decision on where to build a planned battery cell gigafactory in eastern Europe beyond 2022.

The automaker cited economic uncertainty and high energy prices when making the announcement on December 8. In a statement to Reuters, the company said it is still evaluating sites for its future battery gigafactory.

"Volkswagen AG and its battery company PowerCo are continuously evaluating suitable sites for their next gigafactory in Europe. So far, no decisions have been taken, the evaluation process is ongoing."

The central European country is among the locations considered for the factory, the others being Hungary, Poland and Slovakia.

Volkswagen first announced plans to build a battery gigafactory in eastern Europe in 2021, when it said it intended to have six battery gigafactories in Europe by 2030, each with an output of around 40 GWh. At the time, it estimated that the eastern European gigafactory should start producing batteries in 2027.

Gallery: Volkswagen Group's new Salzgitter battery cell gigafactory and new unified cell

Future giga-factory for battery cells at the Salzgitter site

Future giga-factory for battery cells at the Salzgitter site Aerial view of the construction site of the future giga-factory for battery cells at the Salzgitter site Planning meeting on the construction site Head of Battery Cell Development Luna Yzaguirre Sanchez with unified cell Assessment of the stacking formation in the stacking system in the drying room of the R&D line Fully automatic position control of the electrodes in the stacking system in the drying room of the R&D line

Delaying a decision on the gigafactory in eastern Europe may not go down well with Volkswagen Group's Czech unit Skoda, which said in October it expected the parent company to make a decision on the location by the end of 2022.

The German automaker does not seem to be in a rush, though. "There is no pressure to act as we take some more time for decision making in light of current circumstances. At present, there is no impact on planned start of construction or start of production," the company said.

Volkswagen's battery cell plant in eastern Europe would be the fourth under the automaker's plan to build six such sites across Europe by the end of this decade. The company has already broken ground on two gigafactories, the Northvolt Ett plant in Skellefteå, Sweden built with Northvolt and the SalzGiga plant in Salzgitter, Germany. The former is expected to start production in 2023, the latter in 2025.

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The third planned gigafactory will be built in Spain, with Volkswagen Group announcing in May 2022 it will invest €3 billion ($3.2 billion) in a battery plant in Sagunt near Valencia. Things are not set in stone there either as SEAT CEO Wayne Griffiths last month said the Spanish government subsidy for the plant is not sufficient, with Volkswagen Group expecting more than the promised €877 million ($925 million).

The fourth gigafactory will be in eastern Europe, while details about the fifth and sixth have not been announced yet. The EU fears an exodus of investment to the United States, which offers generous green energy subsidies to companies under the Inflation Reduction Act. Volkswagen Group recently announced it started scouting sites for a battery cell plant in Canada.

Read more about Volkswagen's EV battery initiatives

Volkswagen Starts Search For Battery Cell Plant Sites In Canada

Volkswagen Group And Umicore Form Battery Materials Joint Venture

Source: Reuters via Automotive News Europe

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