Volkswagen to invest over $20 bn to build EV batteries

German automaker Volkswagen will invest $20.38 billion to build electric vehicle (EV) batteries, creating 20,000 jobs and generating more than $20 billion in annual sales.

Volkswagen broke the ground for its first cell factory in Salzgitter, Germany in the presence of German Chancellor Olaf Scholz late on Thursday.

The automaker will create a new company called Power Co under CEO Frank Blome and the production at the plant will start in 2025.

"Volkswagen is showing how the future of sustainable, climate-compatible mobility could look. Together, we are laying the foundation for shaping this future to a significant extent in Salzgitter," said German Chancellor Scholz.

Up to 2030, PowerCo will invest more than 20 billion euros, together with partners in the development of the business area, to employ up to 20,000 people in Europe alone.

"The battery cell business is one of the cornerstones of our new auto strategy which will make Volkswagen a leading provider of the sustainable, software-driven mobility of tomorrow. Establishing our own cell factory is a megaproject in technical and economic terms," said Herbert Diess, CEO of Volkswagen AG.

The company will manage international factory operations, the further development of cell technology, the vertical integration of the value chain and the supply of machinery and equipment to the factories.

Looking ahead, further products such as major storage systems for the energy grid are planned.

The company said that following Salzgitter, the next cell factory is to be established at Valencia.

"Sites are currently being identified for three further cell factories in Europe. In addition to Europe, PowerCo is also already exploring the possibility of further gigafactories in North America," Volkswagen announced.

Volkswagen also unveiled the prismatic unified cell announced at the Power Day in 2021.

In future, the plant is to reach an annual capacity of 40 GWh -- enough for about 500,000 electric vehicles.

By 2030, the Volkswagen Group intends to operate six cell factories with a total volume of 240 GWh throughout Europe together with partners.