VW plans six European battery factories by 2030 as it bets on electric future

Volkswagen will build or open six battery factories across Europe by 2030, tightening the carmaker’s grip on the supply chain for electric vehicles as it embarks on an ambitious sales drive.

The plants will have a combined capacity of 240 gigawatt-hours a year, which would produce cells for almost 5m cars annually and help the German group achieve its ambitious electric vehicle plans.

The VW brand expects 70 per cent of sales in Europe and more than 50 per cent of sales in the US and China to be electric by the end of the decade.

The group also wants to increase the number of high-powered charging points across Europe fivefold by 2025.

As carmakers eye rising electric sales to meet tightening global emissions requirements, the industry is grappling with how best to secure supplies of batteries.

Geely on Monday announced it will spend $5bn building a new battery factory in Ganzhou, with a capacity of 42GWh.

Tesla, the industry leader, has moved further up the supply chain by trying to secure supplies of lithium and nickel used in batteries themselves.

As part of Volkswagen’s strategy unveiled on Monday, the company is raising its stake in Swedish battery start-up Northvolt and buying its partner out of a planned gigafactory in Germany.

VW is placing a $14bn order for batteries from Northvolt in the next decade, turning the Swedish group, which was founded by a pair of former Tesla executives, into its lead supplier in the area.

It will lead to Northvolt’s first gigafactory, located close to the Arctic Circle in northern Sweden, increasing its capacity to well above the current planned maximum of 40GWh as the company has more than $27bn in orders from industrial customers.

The move will help secure the batteries VW needs to transition to electric cars and compete with Elon Musk’s Tesla. It will also reduce VW’s reliance on the dominant global battery producers such as South Korea’s LG Chem and China’s CATL, which supply many different carmakers.

VW said in a “Power Day” event on Monday that it will build a battery factory in Salzgitter in Germany with a capacity of 40GWh of batteries a year starting in 2025, following the purchase of Northvolt’s stake in the project.

VW said it would increase its ownership in Northvolt from about 20 per cent. Precise details of both moves were not provided.

“Volkswagen is a key investor, customer and partner on the journey ahead and we will continue to work hard with the goal to provide them with the greenest battery on the planet as they rapidly expand their fleet of electric vehicles,” said Peter Carlsson, Northvolt’s chief executive and co-founder.

Thomas Schmall, head of components for VW, said: “They are one of our key battery suppliers as we make the transition to electric mobility — and there is potential to expand this partnership even further.”

In addition, VW said on Monday it would lower the cost of its batteries by using standard cell formats and moving to next-generation technologies that use fewer materials and store more energy.

VW has a partnership with Silicon Valley start-up QuantumScape, which is developing lithium-metal solid-state batteries that could reduce a car’s charging time to 12 minutes.

VW said on Monday there was still “a lot to do” to commercialise the technology, but it is hoping to roll the batteries out in cars after 2025.

VW also detailed a plan to expand fast-charging networks in Europe fivefold by 2025 to 18,000 chargers. The company said it had signed an agreement with oil company BP to deploy fast charging at its retail sites across Europe.