Volkswagen Revises Battery Production Plans In North America And Europe

Volkswagen is reassessing its ambitious plans for electric vehicle (EV) battery production in response to a recent slump in the EV market, where the company is now scaling back on its target. 

Thomas Schmall, Volkswagen’s Chief Technology Officer and board member in charge of technology, told German newspaper Frankfurter Allgemeine Sonntagszeitung that the company is taking a more cautious approach to its battery factory buildout. Volkswagen had previously announced plans to construct six battery cell plants by 2030, aiming for an annual production capacity of 240 gigawatt hours (GWh). 

However, the company is now scaling back these targets. Schmall stated, “We are currently planning to produce up to 170-gigawatt hours at the three sites in Salzgitter, Valencia, and Ontario.”

The decision reflects a broader trend in the automotive industry, as manufacturers grapple with slower-than-expected EV adoption rates. Factors contributing to this slowdown include:

• Higher-than-anticipated battery costs
• Persistent price premiums for EVs
• Previous dealer markups that alienated potential customers
• Rising interest rates affecting consumer purchasing power

Volkswagen’s Battery Production Plans

Volkswagen’s PowerCo battery division has already started construction on two European plant sites in Salzgitter, Germany, and Valencia, Spain, with production set to begin in 2024 and 2026, respectively. Early work has also started on a third site in Ontario, Canada.

While the company is cutting down its immediate battery production goals, Schmall emphasized that Volkswagen remains flexible. If demand increases, the Valencia and Ontario sites could be expanded to reach the original 2030 target of 200 GWh.

This adjustment in battery strategy follows other signs of Volkswagen’s recalibrated EV outlook including the postponement of plans for the Trinity EV, which may not reach showrooms until 2032.

Despite the scaled-back plans, Volkswagen continues to invest in advanced battery technologies. Schmall confirmed that the company aims to begin producing solid-state batteries this decade, which promise longer range and faster charging for EVs.

As Volkswagen attempts its more measured approach to battery production, this will reflect a growing trend among major automakers to align their EV strategies with actual market demand compared to initial projections.

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