Volkswagen scraps plans for a second battery factory in Lower Saxony

According to a media report, Volkswagen currently sees no chance of realising a second battery cell factory in Lower Saxony, Germany. Lower Saxony’s Minister President Stephan Weil spoke out in favour of a second cell factory in Emden – but was outvoted in the supervisory board because of the costs involved.

Energy prices in Germany are too high for a second battery factory in Lower Saxony, writes Der Spiegel, citing sources close to the company. Weil, who also sits on VW’s supervisory board as the representative of the state of Lower Saxony, repeatedly advocated a second battery factory in his state alongside the one in Salzgitter. However, the planned factory in Emden would not be economically viable at the moment, Der Spiegel reports.

The Wirtschaftswoche writes VW’s “necessary major projects have fallen victim to the lack of money”. The article refers to the company’s own state-of-the-art Trinity plant in Wolfsburg-Warmenau (production is now planned in the existing main plant) and to the second German battery plant “planned in Emden”, which “will probably not happen”.

In response to a question from Der Spiegel, Volkswagen stated that it was sticking to its plan to build cell factories for around 240 GWh in Europe by 2030 but that it would have to be “competitive in terms of cell costs in an international comparison”. At the “Power Day” in March 2021, the group presented its plan to build and operate six 40-GWh factories for its own battery supply in Europe.

Apart from Salzgitter, the only other confirmed European location for a Volkswagen battery cell factory is Sagunt in Spain. Moreover, Northvolt will produce VW’s unified cell in Sweden. Talks are also underway for a plant in Eastern Europe, but a concrete decision on location and investment was postponed until December 2022 – also due to economic uncertainty and high energy prices in the region. VW has not yet given further details on the planned factories 5 and 6. There is also the 90 GWh battery cell factory in Canada – albeit with high subsidies from the Canadian government.

“If you have the opportunity to build a battery factory in Europe, where electricity costs 15 cents per kilowatt hour, but you get 2-3 cents in China or America, we cannot say that under stock corporation law we will do it here out of solidarity,” VW brand manager Thomas Schäfer had explained in an interview in December. Apparently, Stephan Weil got the message: In April, the Lower Saxony governor advocated a “transformation electricity price” that would be capped at seven cents per kilowatt hour with state funds.

In addition to the high energy prices, internal problems make expensive projects like a battery factory difficult. As reported, brand manager Schäfer and group CEO Oliver Blume are planning a billion-euro savings programme and a closer integration of some group brands to increase the comparatively weak earning power of the core brand VW passenger cars.

spiegel.de, wiwo.de (both in German)