Volkswagen Pledges Third of Six new Giga Factories

Volkswagen set out its powertrain strategy for the present decade with the announcement of its third giga factory on the path to six European battery production plants.

Building on its first location in Skellefteå, Sweden, operated by Northvolt AB, and its second location in Salzgitter, Germany, where it has signed an agreement with Chinese cell specialist Gotion High-Tech as its technological partner for a start of production in 2025, Volkswagen has announced a third location in an, as yet, unspecified Spanish site.

During a presentation of its wide-ranging electrification, autonomous and software ambitions for the future, the automaker said the latest plant is intended to have a yearly capacity of 40 GWh hours. It is also envisaged that the group’s small BEV family will be produced in Spain from 2025. The final decision will depend on the general framework and state subsidies.

By 2030, the automaker said, it plans to reduce its carbon footprint per car by 30% over its lifecycle against the benchmark of 2018. At the same time, the share of BEVs is expected to rise to 50%, while in 2040, nearly 100% of all new group vehicles in major markets should be zero- emission, the automaker claimed. By 2050 at the latest, the group intends to operate fully climate neutral.

That said, it expects a robust-margin ICE business, generating strong cash-flows, should finance and accelerate the shift to BEVs. A ramp-up driven by lower battery and factory costs and increasing scale is expected to improve BEV margins. Higher CO2/Euro 7 costs and tax disadvantages will probably further narrow ICE margins. Overall, margin parity should be reached within the next two to three years.

CEO Herbert Diess presenting the of “New Auto” strategy, said: “We set ourselves a strategic target to become global market leader in electric vehicles – and we are well on track. Now we are setting new parameters. Based on software, the next much more radical change is the transition towards much safer, smarter and finally autonomous cars. That means for us: technology, speed and scale will matter more than today. The future of cars will be bright!”

— Paul Myles is a seasoned automotive journalist based in Europe. Follow him on Twitter @Paulmyles_

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