Volkswagen lays out ambitious electrification program

The German automaker, the world’s second-largest, plans to build six battery cell plans across Europe and expand EV charging infrastructure globally.

Volkswagen had initially taken a dim view of electrification. However, the 'dieselgate' emissions cheating scandal in 2015 and the introduction of Chinese quotas for EVs has forced it to re-evaluate its strategy and embrace battery-powered cars. It is now engaged in an ambitious shift towards EVs.

“Our transformation will be fast, it will be unprecedented,” said CEO Herbert Diess, speaking at Volkswagen’s 'Power Day' event. “E-mobility has become core business for us.”

The six European factories will be operating by 2030, he said, and they could be built by Volkswagen alone or with partners. They will have joint annual production capacity of up to 240GWh.

The first 40GWh will come from Stockholm-based Northvolt, which will begin production for Volkswagen in 2023.

The two companies have closed a €12bn deal which will make Northvolt the strategic lead battery supplier for Volkswagen’s European operations. Volkswagen will raise its 20 per cent stake in Northvolt and take over its stake in its planned “Northvolt Zwei” battery plant in Salzgitter, Germany; this will become its second factory from 2025.

A third battery plant will open in Spain, France or Portugal in 2026 and a fourth will be opened in Poland, Slovakia or the Czech Republic in 2027. Two further plants will be established by 2030. While the first two factories are already reflected in Volkswagen’s financial planning, the company is in discussions about how the subsequent four plants will be managed with Volkswagen’s financial targets in mind, Reuters reported.

It is not known how much the plan will cost by 2030, although Volkswagen said that it plans to spend €35bn on e-mobility by 2025.

The establishment of the battery manufacturing plants will coincide with a large rollout of EV charging infrastructure; the lack of this infrastructure is frequently cited as a major roadblock to widespread EV adoption due to complaints such as “range anxiety”.

Volkswagen plans to leverage existing programs and partnerships (including with BP) to have 18,000 public fast-charging points in operation in Europe by 2025. According to the company this is a five-fold expansion of the existing fast-charging network. It will invest €400m in the initiative. It plans to operate 3,500 fast-charging points in North America by the end of 2021 and 17,000 in China by 2025.

During the Power Day event, Volkswagen also revealed its plans for a unified prismatic battery cell (a thin and light cuboid-shaped device composed of sandwiched electrodes) to be rolled out from 2023. Other EV manufacturers such as Tesla use more conventional cylindrical battery cells, which are cheaper and easier to manufacture.

Schmall said that the company is aiming to drive down the cost of battery systems to below €100/kWh, rendering EVs an affordable alternative to vehicles with internal combustion engines.