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  • - [Narrator] This factory in Germany

  • has made engines for some of the most popular cars

  • in the world for over five decades.

  • - [Announcer] Ever wish you owned a Volkswagen?

  • - [Narrator] But more recently, some of those cars

  • have lost their shine.

  • - [Reporter] VW owners coming to grips

  • with the realization that their diesel cars

  • can emit from 10 to 40 times more pollutants.

  • - We all know that we have let down customers.

  • - [Narrator] What's more, global sales

  • of internal combustion engines are predicted to drop

  • by over 50% by 2035.

  • The hot new market? Electric vehicles.

  • So to try and capture that market,

  • VW is transforming this engine factory

  • into it's new EV battery facility,

  • the first of six that it plans to build in Europe

  • at a cost of about 15 billion dollars,

  • according to analysts.

  • - What you see behind us has nothing to do

  • with combustion engines

  • and that shows the size of this transformation.

  • - [Narrator] That means going from making combustion engines

  • that have more than 2,000 moving parts,

  • to high-tech electric motors that only have about 20,

  • and changing it's workforce to do that.

  • - Traditional automakers, if they wanna be in this market

  • in 2035, they need to develop just as much as the startup's

  • need to develop.

  • - [Narrator] The EV market is currently dominated by Tesla

  • and faces disruption from a bunch of new startups.

  • - They have nothing to lose, they start from scratch.

  • We have a lot to lose.

  • - [Narrator] So could this factory be a blueprint

  • for traditional automakers to survive the EV revolution?

  • While VW says that its battery factory in Salzgitter

  • won't be online for another two years or so,

  • Tesla already has several gigafactories in operation,

  • and completed its Shanghai facility in under a year.

  • It also says it's nearing completion of a huge plant

  • here in Germany.

  • - We've decided to put Tesla gigafactory Europe

  • in the Berlin area.

  • - [Narrator] Other well funded startups

  • like Lucid and Rivian have set up brand new factories

  • to start EV production this year.

  • So legacy automakers like GM, Ford and VW

  • have all announced they're investing billions

  • into EV production to defend their market share,

  • with VW committing to 43 billion dollars in five years.

  • - When you look at what the startups are doing,

  • they don't have to transition.

  • You don't have to change a legacy footprint,

  • so traditional automakers don't have the luxury

  • of sitting back and saying, ah,

  • we'll wait and see how it goes.

  • - We are responsible for the people and for our customers

  • and we have to transform.

  • - [Narrator] So how is VW investing

  • that money in Salzgitter?

  • Well, some of those decisions are made

  • by this engineer, Frank Blome.

  • - We are building a small scale sales right now

  • and we are building up the first mass production plant.

  • - [Narrator] VW has converted part of its existing facotry

  • into labs and a pilot line to test and refine the science

  • behind its batteries.

  • It plans to build a brand new facility right next to it,

  • which could produce batteries for over 600,000 vehicles

  • a year and is expected to cost around 2.5 billion dollars,

  • according to analysts.

  • Although it says it hasn't finalized the designs

  • for it's new facility yet,

  • the factory is expected to be similar to this one in Sweden.

  • It's owned by battery supplier Northvolt

  • and VW is a major investor in the company.

  • Thomas Schmall is CEO of VW's component division.

  • - The bottle neck will be how fast you can establish,

  • increase and ramp up your battery business.

  • - [Narrator] Within it's labs, VW is trying to figure out

  • what kind of battery's it's electric vehicles will need

  • in the future.

  • It's testing battery recycling technology

  • and to get ahead of the competition,

  • it's experimenting with next generation,

  • solid state batteries which don't contain liquid lithium,

  • and promise far fasting charging and greater mileage.

  • - Fast charge is a big, big topic for us.

  • We are working on that with a big workforce.

  • - [Narrator] The transition will effect everyone

  • in this plant.

  • The company will need fewer mechanical engineers

  • and will need new people with totally different skills,

  • like electro-chemists or developers,

  • as EV's need so much software that VW is set to become

  • one of the largest tech companies in Europe.

  • - To find the right people is a challenge.

  • It's a new industry,

  • everybody wants electro-chemistry people.

  • - I think the big outstanding question is,

  • we know that it will take fewer employees

  • to build a battery cell pack,

  • so therefore, how do you figure that out?

  • Where do you transition people to?

  • - [Narrator] As the battery plant grows,

  • over time, part of the staff will be retrained,

  • while some legacy jobs are expected to go away.

  • At the end of this transition,

  • it's unclear whether the overall number of workers

  • on this site will go down.

  • Globally, VW has already made some cuts.

  • In 2019, the company announced that it was cutting

  • some 7,000 jobs over five years

  • and since 2016, it has eliminated at least 23,000 positions

  • by offering early retirement and not replacing workers.

  • - We always have this issue, oh,

  • maybe it's destroying business, not supplied.

  • You can, if you do it right, you can create jobs.

  • We will have 1,500, 1,600 employees

  • in the new sale business, what we are doing here,

  • and that's not the end,

  • because this is only the first portion

  • of the first part of the cell plant.

  • - [Narrator] The stakes are particularly high for VW

  • as it's trying to change it's image as a polluter,

  • while also meeting new environmental regulations

  • around the world.

  • After the emission scandal in 2015,

  • VW pleaded guilty to installing a device on it's vehicles

  • to cheat US emissions tests.

  • - It is not only our cars we have to fix,

  • we know we have to repair our credibility too.

  • - [Narrator] Today, as VW bets big on electric,

  • it's US sales are much lower than they were in 2012.

  • - I think it does dovetail with needing to prove

  • that they're clean and having that hanging over their heads

  • 'cause it does, news doesn't stop on that.

  • It does still pop up, so the issue isn't completely dead.

  • - [Narrator] So just like this factory,

  • the decades old company has to reinvent itself

  • to keep up with technology and beat competitors old and new.

  • (gentle music)

- [Narrator] This factory in Germany

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How VW Is Turning Engine Factories Into EV Battery Plants | WSJ

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    joey joey posted on 2021/06/11
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