Volkswagen announced the formation of PowerCo last July. The company covers the group’s battery business, from ensuring the extraction of raw materials through the production of batteries to their recycling.
The budget is impressive. Volkswagen is investing over twenty billion euros, roughly half a trillion crowns, by 2030. It wants to create over twenty thousand jobs in Europe alone. Whether even such a high number of positions will be enough to replace those that will disappear together with internal combustion vehicles will be revealed in the coming years.
Massive investments are necessary if the concern wants to catch up with the competition. As previously estimated by the Reuters agency, VW will invest over one hundred billion dollars in battery self-sufficiency, Tesla hundreds of billions, Toyota seventy billions, General Motors, BMW and Stellantis are to spend around 35 billions. Even the Chinese BYD, an electric car manufacturer that controls the entire chain – mining and processing of raw materials, production of batteries and very successful electric cars, invested dizzying sums long ago. It is currently expanding to European markets together with other Chinese brands.
The transition from internal combustion engines to batteries does not mean only a change in propulsion, but a large-scale transformation of the automotive business as a whole. Automobile companies want to fundamentally reduce their dependence on external suppliers, both because of the reduction of production costs and the risks associated with the geopolitical sharpening of relations between the West and the East. If they can become a valuable extortion tool for energy supply, why can’t they be raw materials for the production of batteries such as lithium, nickel or cobalt. The battery business is overwhelmingly dominated by Asian companies.
“We are looking for ways to secure battery cells, modules and final batteries along our own axis. The goal is to reduce production costs by twenty percent. Unfortunately, the prices of raw materials are rising sharply, for example steel and aluminum, which are important, among other things, in the production of engines,” said Michael Oeljeklaus, a member of the Škoda Auto board of directors responsible for production and logistics, in an interview for E15. Škoda is a member of the Volkswagen group.
Volkswagen intends to invest in the mining of mineral resources, or in mining companies in Canada. Thomas Schmall, member of Volkswagen’s board responsible for technology, told Reuters without further details. So far, producers rarely approach the purchase of shares in mines, but often enter into partnerships with producers of key raw materials.
The next link in the chain is battery production. PowerCo will build six factories – so-called gigafactories – in Europe and two in North America. They are already building in Salzgitter, recently started in Valencia, the factory will also be built in Skellefteå, Sweden. Construction will soon begin in Ontario as well. PowerCo will build North America’s first-ever battery factory there.
In the future, batteries with a total capacity of 240 gigawatt hours are to come off the “lines” of six European factories. At the same time, factories, production processes and final batteries will be unified according to the pattern of more uniform = cheaper. So anyone who would like to see what a gigafactory in Líny in Pilsen could look like should go to Salzgitter. In the future, the cars of the group’s brands, including Škoda, Seat and Volkswagen, should be powered by the same battery cell or the same battery platform.
PowerCo will not only produce batteries for its own use, but also for customers in global markets. According to Schmall, the company will supply, for example, batteries for 1.2 million cars of the American Ford, which will produce cars on the electric platform of Volkswagen. The German automaker wants to produce enough key battery cells to cover half of its global battery needs.
What PowerCo doesn’t have, like the battery divisions of other European automakers, is time. To quickly switch from the production of conventional cars to electric cars, manufacturers are forced not only by Asian or American competition, but also by European Union regulations. If the strict version of the draft of the new Euro 7 emission standard is passed, manufacturers will have to stop production of smaller cars – for example, Škoda Auto would say goodbye to the Fabia, Scala and Kamiq models. The competition would have to do the same.
It should be practically impossible to sell internal combustion cars after 2035. The exception for synthetic fuels should rather only help brands like Ferrari or Porsche, not the high-volume ones.
“Fiscal year 2023 will be decisive for the fulfillment of strategic goals and for accelerating progress across the entire group,” recently declared the head of the Volkswagen Group, Oliver Blume. No wonder. As early as 2025, every fifth car sold by the concern is to be electric, by 2030 every second.
This is how the electric cars of brands belonging to the VW concern look like:
