Volkswagen to Invest 41 Trillion KRW in Battery Cells by 2024 (Comprehensive)

[Image source=EPA Yonhap News]

[Asia Economy Reporters Kwon Jae-hee and Hwang Yoon-joo] Volkswagen Group, the world's second-largest electric vehicle manufacturer, is investing 30 billion euros (approximately 41 trillion KRW) to transition to E-mobility by producing battery cells in-house. To this end, it also announced the opening of a state-of-the-art battery research center in Germany that will serve as an advanced base for securing and developing high-level battery technology expertise. As Volkswagen's battery strategy becomes more concrete, tension is rising in the domestic battery industry.

According to local media such as Germany's Handelsblatt on the 16th (local time), Volkswagen Group announced it will invest 30 billion euros (approximately 41 trillion KRW) by 2024.

In addition, Volkswagen Group has opened four research centers for in-house battery cell manufacturing and production in Salzgitter, Lower Saxony, Germany, which has played a key role in internal combustion engine manufacturing.

Earlier, at the 'Power Day' event in March, Volkswagen Group announced plans to produce batteries, the core of electric vehicles, in-house, presenting a blueprint to produce 240 GWh annually by 2030 and to build six battery factories in Europe.

Volkswagen Group previously announced that each of the six battery cell factories to be established in Europe will have a maximum production capacity of up to 40 gigawatt-hours (GWh). Besides Salzgitter, construction has been confirmed in Sweden and Spain, and the locations of the remaining three factories will be finalized within a few months. One factory in Western Europe will start operations in 2026, and one in Eastern Europe in 2027.

Volkswagen Group expects these six factories to be capable of producing battery cells for 5 million electric vehicles annually.

Only the construction of these six factories, to be completed within the next 8 to 9 years, will require an investment of 15 billion euros (approximately 21 trillion KRW), and the total investment for the transition to E-mobility by 2024 is expected to reach 30 billion euros (approximately 41 trillion KRW).

Volkswagen Group aims for electric vehicles to account for 70% of total new car sales by 2030, with Porsche targeting 80%.

Domestic companies are on high alert due to Volkswagen's moves. Although LG Energy Solution and SK Innovation have secured several years' worth of orders from Volkswagen, the possibility of future orders is expected to decrease. Following Volkswagen, more automakers may start in-house production to ensure stable battery supply.

Meanwhile, some view that the battery industry’s high entry barriers for new companies could lead to internalization through joint ventures (JVs) or equity investments with battery companies, which could present new opportunities for battery manufacturers.

A battery industry official said, "It will be difficult for automakers to internalize the entire volume of electric vehicle battery demand," adding, "To hedge battery sourcing risks, they are expected to continue cooperating with top battery manufacturers."

This content was produced with the assistance of AI translation services.