Volkswagen has officially started producing battery cells in Europe, marking a major strategic milestone in the group’s transition to electric mobility. At its Salzgitter site in Germany, the first battery cells developed and manufactured entirely in-house have rolled off the production line, a move that could directly influence pricing, availability and performance of future Volkswagen Group electric vehicles.
The new facility is operated by PowerCo, Volkswagen’s dedicated battery company, and represents the first time the group combines battery development and large-scale production on European soil. The initial cells will now undergo testing in Volkswagen Group electric models before series production begins.
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Compact electric cars at the center of the strategy
From 2026, these new battery cells are expected to power a new generation of compact and more affordable electric vehicles, including the Volkswagen ID. Polo, Cupra Raval and Skoda Epiq. This segment is considered critical for accelerating EV adoption across Europe, as smaller cars must strike a careful balance between cost, range and production scale.
Volkswagen Group CEO Oliver Blume describes the start of production as more than just the opening of another factory. According to him, establishing in-house battery cell development and manufacturing strengthens the group’s technological independence and reinforces Europe’s role in the global automotive industry.
The Unified Cell concept
Central to Volkswagen’s approach is the so-called Unified Cell. Designed as a standardized battery cell that can be used across brands, models and markets, it aims to simplify manufacturing and reduce costs through economies of scale.
The first generation is based on NMC chemistry and is claimed to offer around 10 percent higher energy density than current high-volume cells. Paired with Volkswagen’s cell-to-pack architecture, the objective is to improve driving range and energy efficiency without increasing vehicle prices.
At a later stage, PowerCo also plans to introduce LFP versions of the Unified Cell. These cheaper battery variants are particularly suited to entry-level electric cars, where affordability plays a decisive role.
For consumers, the main benefits of Volkswagen’s battery strategy are expected to be lower costs and more reliable deliveries. Over time, PowerCo is expected to cover around half of the group’s total battery cell demand, while the remainder will continue to be sourced from external suppliers.
A common battery cell standard should help reduce dependency on Asian manufacturers, simplify scaling when demand increases and improve overall supply security.
Salzgitter as a European battery hub
Production capacity at the Salzgitter plant will be expanded gradually. Volkswagen is initially targeting up to 20 GWh annually, with the option to increase capacity to 40 GWh in the future. The site also serves as a blueprint for upcoming PowerCo factories in Valencia and Canada, which will follow the same production concept.
Beyond manufacturing, Salzgitter is becoming Volkswagen’s central hub for battery research in Europe. Testing and development facilities have been expanded since 2022, with further installations scheduled to come online by 2026.
Volkswagen also highlights the plant’s environmental credentials. The factory is powered entirely by renewable energy and is expected to reduce CO₂ emissions by up to 115,000 tonnes per year compared to conventional battery cell production.
