Volkswagen: No Rush To Decide On New European Battery Plants

Volkswagen's battery needs are covered until 2028 by its three confirmed factories in Europe - the Salzgitter plant in Germany, Northvolt's plant in Sweden and a planned plant in Valencia, board member Thomas Schmall said on Monday.

The carmaker is still targeting 240 gigawatt hours of battery cell production capacity in Europe but could do this with fewer than the originally planned six plants, Schmall said.

"We stick to the 240 gigawatt hours. Whether we need five or six plants depends on the incentive strategy of the countries... this is not decided yet," he added.

The executive said he expects demand for between 60 and 100 gigawatt hours of capacity in North America, but did not give details on how much of this capacity will be provided by Volkswagen-owned plants.

It was a misunderstanding that announcements of new plants in North America meant that the carmaker would do less in Europe, Schmall said, adding it was simply waiting to see what Europe had to offer as a response to the U.S. Inflation Reduction Act (IRA).

The Valencia plant, confirmed last year, is due to begin production in 2026. Volkswagen does not need to start construction of a new plant in Europe until 2025, Schmall said, adding a decision on the next location could be made sooner if a similar tailwind to the IRA materialised in Europe.

The carmaker was standardising the structure of its factories and batteries, but the chemistry of the battery would differ for different models, Schmall said: Batteries for entry-level models will use iron phosphate, while medium-level models will have high manganese content and top models increased silicon content.

With its PowerCo battery unit, Volkswagen wanted to become a significant player but not the only player in the battery space, Schmall added, highlighting that 95% of the battery market is dominated by Asian players.

(Reporting by Victoria WalderseeEditing by Miranda Murray, Kirsten Donovan)