Less than a year after breaking ground on its first battery cell plant in Salzgitter, Germany, the Volkswagen Group gave the starting signal for construction of its second PowerCo cell factory in the Spanish region of Valencia.

Gigafactory Valencia will start production of unified cells in 2026 and will directly employ more than 3,000 people in the future, with an estimated up to 30,000 indirect jobs potentially being created at suppliers and partners in Spain.

Volkswagen estimates the initial annual production capacity will be 40 GWh, with the potential to expand it to 60 GWh in the future. The plant is being built over an area of around 321 acres (130 hectares) in Sagunto, 18 miles (30 kilometers) north of Valencia.

Counting the planned supplier park, which will be built parallel to the PowerCo factory, the area even amounts to 494 acres (200 hectares).

Volkswagen says the main factors that led to the decision to build the site in Valencia included the  availability of low-cost green electricity, the regional research and innovation cluster, as well as the good transport infrastructure and proximity to the Group's Spanish production sites. 

Gallery: Breaking ground ceremony for Volkswagen Group's battery cell factory in Valencia, Spain

The Valencia gigafactory will supply unified cells to the vehicle assembly plants in Martorell and Pamplona, among other sites. These plants will build Volkswagen Group's future entry-level EVs under the Volkswagen, Cupra, and Skoda brands.

"We are moving into the fast lane with PowerCo. We have just broken ground for PowerCo's second gigafactory in Valencia, and are already making the next step with the announcement of another gigafactory in St. Thomas, Canada. Our objective is to make PowerCo a global player in the battery business and pave the way for better mobility with sustainably manufactured battery cells. The gigafactory Valencia is an important milestone in that."

Thomas Schmall, Board of Management member responsible for Group Technology and Chairman of the Supervisory Board of PowerCo SE

PowerCo aims to manufacture sustainable batteries in Valencia, with the cell plant to be supplied completely with green electricity generated by solar and wind power, including from a 617-acre (250-hectare) new solar farm in the immediate vicinity. 

As with the Salzgiga plant, the investment will be handled by Volkswagen Group's PowerCo, a separate battery company. Since its launch in July 2022, PowerCo has decided three sites for cell factories: Salzgitter, Valencia, and St. Thomas in Ontario, Canada.

The facilities in Europe are already under construction and will open in 2025 and 2026, respectively, while the Canadian site is scheduled to start production in 2027.

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