Dusseldorf There have been rumors at Volkswagen for days about a new battery cell plant in North America. Last Friday, Europe’s largest automaker scheduled a conference call to announce a major investment in the region to journalists. However, VW canceled the appointment at short notice. It’s been rumbling ever since. Is the battery plant still to come – or not?
According to information from the Handelsblatt, VW will announce a decision in favor of North America in the coming days. “It’s not a question of if, it’s just a question of when,” says an insider. The most likely location is Canada. There, VW could benefit from the billions in subsidies from the US government.
The explosive thing: At the same time, the car manufacturer is likely to postpone its planned investment in a battery factory in Eastern Europe. At a meeting of the “European Battery Alliance” a few days ago, VW is said to have informed the government representatives present that corresponding plans were being put on hold for the time being. A person from the group of participants reported this to the Handelsblatt.
Company circles also say that of the group’s current battery projects, the one in Eastern Europe is “the least advanced”. Therefore, a shift in the schedule is most likely there. The Financial Times reported the same thing on Wednesday.
Volkswagen did not want to officially comment on a possible shift in priorities. A spokesman said on Wednesday that the search “continues to find suitable locations for our next cell factories in Eastern Europe and North America”. So far there have been no decisions on this.
VW would receive billions in subsidies from the US government
The decision is likely to be motivated primarily by the US government’s “Inflation Reduction Act” climate protection program, from which the world’s second-largest automaker is likely to benefit greatly. For example, VW could collect around 8.5 billion euros in subsidies for a 40-gigawatt-hour plant in North America over several years.
For comparison: The construction of a battery plant in Europe costs Volkswagen between two and four billion euros. About ten percent of this is currently being funded by the EU, i.e. 200 to 400 million euros.
The US government is luring the auto ranche with billions in subsidies.
(Photo: Volkswagen AG)
Volkswagen has set itself ambitious goals for the electrification of the model range. In order to be able to meet these, the car manufacturer had declared that it would build six battery cell factories in Europe by the end of the decade. This corresponds to a production capacity of 240 gigawatt hours (GWh).
In Sweden, the group is setting up a cell production facility together with the battery manufacturer Northvolt. The first own plant is currently being built in Salzgitter, Lower Saxony. There is currently still a construction site there, the factory is scheduled to start in 2025. A second so-called gigafactory is planned in Spain near Valencia. The other locations have not yet been announced. In Eastern Europe, the Czech Republic, Poland and Slovakia have so far been considered promising.
However, the governments there keep a low profile when it comes to inquiries. A spokesman for the Czech Ministry of Industry replied to the Handelsblatt: “Negotiations on the Gigafactory project with VW are ongoing, as are the technical preparations.” He did not give a date for the completion of the project.
A government spokesman in Warsaw said that “what investments will be made in our country” will only be known after the contract has been signed. The Slovakian government did not respond to a request.
Volkswagen’s battery plans in Europe: fewer plants, more production capacity?
When presenting the preliminary annual figures on Friday, CFO Arno Antlitz indicated that Volkswagen could manage with fewer than six battery cell factories in the future in order to achieve its targeted production capacity in Europe. This would mean that the individual battery plants in Europe would have to be equipped with more production capacity by 2030.
A spokesman reconfirmed VW’s target of 240 GWh for Europe. However, this requires “competitive” framework conditions. “We are therefore currently waiting to see what the EU Green Deal will bring,” the company said.
>> Read also: A continent is stuck – How Europe loses the race for the gigafactories
How quickly or slowly VW continues to build in Europe is likely to depend primarily on Brussels’ response to America’s multi-billion dollar subsidy program. The European Commission wants to present its Net Zero Industry Act next week. This should significantly ease the subsidy policy in Europe and state a minimum amount for future investments.
By 2030, the EU wants to be able to produce 40 percent of its annual requirement for emission-free technologies itself, writes the Commission in a draft. The document is available to the Handelsblatt.
VW and Canada: A “logical option”
It has been known for a long time that VW is planning a battery cell plant in North America. By 2030, the Wolfsburg-based company wants to increase its market share to ten percent. At the end of January, the Handelsblatt reported, with reference to entries in a lobby register, that VW was exploring the construction of a battery cell factory in the Canadian province of Ontario.
According to the documents, Ontario “offered to support the project through investments and other incentive contributions.” Under the number PP4740, CEO Oliver Blume appears in person in the register. In the meantime, further VW entries have been added to the database.
Seven recent hits for Volkswagen.
Canada is one of the few western countries that has important battery raw materials such as lithium, nickel or cobalt. In August and December, VW therefore concluded several agreements to secure important battery raw materials in the country.
Since then, CEO Oliver Blume has called the country “a logical option” when it comes to the battery issue. Because Canada and the USA have a free trade agreement, investments in the country can also be subsidized via the IRA funding program.
Volkswagen would not be the first group to give priority to North America because of the subsidies. According to a recent study by the environmental organization Transport & Environment, two out of three battery projects in Europe are currently at risk.
The US carmaker Tesla recently stopped its plans for its own cell production in Grünheide near Berlin and instead invested in the construction of a plant in the US state of Nevada. Northvolt actually wanted to build its next battery cell plant in Schleswig-Holstein, but is now considering producing in America first in view of the funding opportunities.
Collaboration: Christoph Herwartz, Moritz Koch
More: The US is experiencing a double energy boom.