VW Group apparently slashes funding for battery subsidiary PowerCo

This was reported by Handelsblatt, citing sources within the VW Group. The company’s five-year plan for PowerCo is now said to involve only a mid-single-digit billion-euro figure. A spokesperson confirmed to the German business newspaper that the expansion would be ‘temporally stretched’ and ‘accordingly reduced.’ The budget for PowerCo has already been gradually cut: from an original €15 billion to €12 billion, then to €10 billion. “We are now significantly below €10 billion,” CFO Arno Antlitz stated recently.

To finance its battery subsidiary, the German manufacturer is reportedly seeking alternative funding sources. According to Handelsblatt, VW is exploring external investors for PowerCo. New joint-venture structures, such as for individual plants, are also under consideration. Additionally, PowerCo is investigating state funding opportunities. In the long term, an initial public offering (IPO) remains a possibility.

Meanwhile, the first unified battery cell is set to roll off the production line at PowerCo’s Salzgitter plant in mid-December. The manufacturer presented the production version of this new, in-house cell in September. It will debut in the upcoming small battery-electric vehicles from VW, Skoda, and Cupra. The unified cell made headlines when Volkswagen unveiled its battery roadmap for the decade in spring 2021. It was designed to reduce complexity and costs and, according to the original plans, would be installed in up to 80 per cent of all the group’s electric vehicles by 2030.

The need for PowerCo to operate with significantly less group capital in the coming years stems from the slower-than-expected ramp-up of electric vehicle adoption in Europe and North America. Many will recall that PowerCo was originally supposed to build six battery cell plants. Only three will now be realised: in Salzgitter, Valencia, and St. Thomas in Canada. Even in these plants, only about half of the originally planned capacity will be required by the end of the decade, as Handelsblatt has learned. As a result, the European sites will ramp up more slowly than initially assumed.

At the same time, PowerCo’s losses for this year are once again higher than the previous year’s level. In total, the VW subsidiary has cost the group more than two and a half billion euros since its inception. However, the consistently high investment in PowerCo is no longer seen as indispensable within the group. The exact amount the battery subsidiary will secure in the upcoming planning round could be revealed as early as Thursday. According to Handelsblatt, VW’s Supervisory Board is meeting that day to finalise the five-year plan.

That means Volkswagen is behind schedule. Over the years, it has become customary for the group to finalise its so-called ‘planning round’ in November, during which it determines, among other things, which models will be built in which plants over the next five years. Just a few days ago, Automobilwoche reported that the conclusion of this year’s planning round may not take place at all this year and could be postponed to 2026, because critical decisions regarding model strategy have yet to be made. One way or another, more details will emerge by the end of the week.

By the way: Last year, the company also missed the November deadline, as labour disputes prevented planning. Only just before Christmas 2024, as part of the wage agreement, important decisions regarding models and plants were made—including that production at the Gläserne Manufaktur in Dresden will end in 2025.

handelsblatt.com (in German)

This article was first published by Cora Werwitzke for electrive’s German edition.