Volkswagen is to construct buildings and infrastructure for its joint venture with Northvolt at the Zwei factory to produce lithium-ion battery cells at the Salzgitter site, based on the existing Centre of Excellence for Battery Cells.

Some EUR450m (US$488m) is to be invested in the project, with the joint venture renting the factory space.

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Battery cell production at the plant is scheduled to start in early 2024 with an initial production capacity of 16 gigawatt hours.

“We are optimising the Volkswagen Group’s position in the key future field of batteries”, said Volkswagen Group board member for Components and Procurement and member of the Northvolt board, Stefan Sommer.

“In addition to a very secure supply base with external producers, we are also systematically building up further capacities.”

In September, 2019, Volkswagen and Northvolt established a joint venture to prepare for the large-scale production of lithium-ion batteries in Germany. Construction work at the site is scheduled to begin before the end of this year.

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The Volkswagen Group is amassing technological knowledge in the field of battery cell production as part of its electrification strategy. In addition, the Group maintains relations with several producers to secure its battery supplies in all world regions.

Currently, these suppliers are LG Chem, Samsung and SKI for Europe as well as CATL for China and Europe. In addition, SKI will also supply battery cells for the US market.

In Europe, Volkswagen expects annual demand of more than 150 gigawatt hours from 2025, with demand in Asia at a similar level.