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Volkswagen To Invest $20 Bln In Building Own EV Batteries

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Volkswagen AG (VKW.L) announced on Thursday that it would be investing a sum of $20.38 billion to build electric vehicle batteries, a move, which the company says will lead to the creation of 20,000 jobs and generate $20.38 billion in annual sales.

The automaker will set up a new company called Power Co to oversee the vast effort as Volkswagen moves ahead to secure enough capacity, materials, and supplies to power its EV ambitions.

Power Co will manage VW's entire battery supply chain, from research and development of new technologies to the mining of the raw materials to end-of-life recycling. The news was announced at a ground-breaking ceremony for the company's first battery plant in Salzgitter, a city in Germany's Lower Saxony.

VW CEO Herbert Diess said in a statement, "The battery cell business is one of the cornerstones of our New Auto strategy which will make Volkswagen a leading provider of the sustainable, software-driven mobility of tomorrow. Establishing our own cell factory is a megaproject in technical and economic terms. It shows that we are bringing the leading-edge technology of the future to Germany!"

Last year, the company revealed plans to build six battery cell production plants in Europe by 2030, including the facility in Salzgitter and one in Skelleftea, Sweden. A third plant will be established in Valencia, Spain, and the fourth factory will be based in Eastern Europe. The company is also exploring plans to build future giga factories in North America. The plants will eventually have a production capacity of 240 gigawatt-hours a year.

Beginning 2023, VW plans to roll out a new unified prismatic cell design of its batteries that will be installed across the automaker's brands. The goal is to have this unified cell design powering up to 80 percent of VW's electric vehicles by 2030.

The company has also signed contracts with two other major battery producers, Samsung and CATL. And the company is backing a start-up based in San Jose, California, QuantumScape, which is working on more energy-efficient solid-state batteries.

VW, which is the second-largest automaker in the world based on volume, has run into issues in its shift to electric vehicles. The company CEO recently said that VW was "basically sold out on electric vehicles in Europe and in the United States for the year," which means that anyone hoping to get an EV from VW, Audi, or any of the group's other brands may have to wait until 2023 as it tries to get in place EV production.

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