Et is a date that Lower Saxony’s Prime Minister Stephan Weil knows how to use in the election campaign. As early as midday, the SPD politician appears at a works meeting in the Volkswagen plant in Salzgitter and celebrates the laying of the foundation stone for a new battery cell factory that Europe’s largest car company VW is pounding out of the ground there.
In the afternoon he follows up at a ceremony in front of hundreds of invited guests. “The heart of the automotive industry will beat electrically in the future – and it will beat in Lower Saxony,” he calls out to them. His party colleague, Chancellor Olaf Scholz, who came especially to the event, endorsed and praised the investment as a “foundation” for sustainable and climate-friendly mobility.
The event on Thursday could have come from the scheduling of the Hanoverian SPD election campaign headquarters. In the state involved in VW, elections will be held in three months, and Weil – a member of the group’s supervisory board by office – is struggling with weak poll numbers. In fact, the matter has been planned well in advance, even if it fits perfectly into the prime minister’s current script. Around 5,000 jobs are to be created when VW builds its unit cell for fully electric volume models in Salzgitter by 2025.
The axis between SPD and IG Metall works
Works council leader Daniela Cavallo completes the picture on this day and praises Weil’s commitment, which was important for the decision to build the plant. The axis between IG Metall and the Social Democratic State Chancellery in Hanover, it seems, works perfectly.
The plant, dubbed “Salzgiga”, for which the foundation stone will be laid on Thursday, is more than just a stand-alone factory. It is intended to become a technical blueprint for other VW battery cell production locations in Europe. The first, a project with Northvolt in Sweden, is expected to produce cells for premium vehicles as early as next year. After the opening of Salzgitter, Valencia in Spain will be connected to the grid, and another location is to be built in Eastern Europe. 20 billion euros in investments are planned, a sales potential of the same amount is expected from the end of the decade. 20,000 jobs would be created in European production countries, announced VW CEO Herbert Diess. VW will also open its own locations in America. “Setting up your own cell production is a technological and economic mega-project.”
How great the effort is can be seen in Salzgitter as if under a magnifying glass. Several factory blocks are being built on an area the size of 30 soccer fields, in which battery cells with an output of 40 gigawatt hours for 500,000 electric vehicles a year are to be built. Management, the works council and Lower Saxony as the major shareholder want to secure VW’s e-offensive and reduce dependence on suppliers from Asia, who dominate the market for cells.
In view of the increasing difficulties in global supply chains, this is a decisive factor, said Chancellor Scholz in his speech. “It’s not a good situation when a container ship lying sideways in the Suez Canal stops us on our way to climate-neutral mobility.” He is referring to the accident involving the freighter Ever Given in spring 2021, one of many factors that affected global logistics at the time unhinged.
In addition to security of supply, the cell factories also have employment policy reasons, of which Salzgitter is a good example. Around 6,500 people work at the site, the largest engine factory of the Wolfsburg core brand VW. More than 60 million internal combustion engines have been manufactured there over the past few decades, but in the course of e-mobility, employment has come under threat, also because electric motors and other mechanical components for the new drive technology can be produced with significantly less effort. The cell factory now secures the future, emphasizes Prime Minister Weil, who emphasizes in particular that Salzgitter will not only produce cells, but also take on research and development, recycling and other tasks related to battery technology. “Lower Saxony remains a car country, digital, climate-neutral and above all very successful.”
Production in Europe is controlled by a separate company, the new company Powerco. In a few years it could even go public, but before that the focus is on the technological structure, as Powerco boss Frank Blome announces. “We standardize on the basis of European norms and scale,” he says. “This enables speed and cost optimization with the highest quality.” Not only equipment, buildings and infrastructure would be standardized, but also products, processes and IT.
In view of the usual subsidies for projects of this kind, he has a surprising answer to the question of how much state money flowed into the settlement in Salzgitter: None. The possibility of EU funding via an “Important Projects of Common European Interest”, in short: IPCEI – i.e. a project of overriding European interest – did not exist at the time of planning, adds Thomas Schmall, CTO of the VW Group.
Due to time constraints, it was therefore decided to build entirely on our own account. Subsidies, on the other hand, play a major role in setting up other cell factories in Europe, for example in Spain, where large government subsidies are to flow. Talks are also being held with governments in Eastern Europe about subsidies.