Volkswagen, one of the leading car makers, is driving forward the transition to electric vehicles (EVs). To be successful, the Wolfsburg, Germany-based company believes that it’s crucial to vertically integrate the battery value chain. Consequently, Volkswagen took matters into its own hands and founded the battery company PowerCo in 2022.
“PowerCo will develop and produce battery cells for the VW Group in best quality, in large numbers,” Andreas Eckle, CIO of PowerCo SE, told the audience during a live session at Hannover Messe trade fair. “The gigafactories are set up to a standard factory design.” This ensures the same processes, the same equipment, and the same workflows at all its locations, he explained.
Three Gigafactories from Scratch
“Construction is in full swing at the first standard factory in Salzgitter, Germany, only about 70 kilometers from Hannover. It serves as a blueprint for all PowerCo’s gigafactories,” Eckle said. Cell production in Germany will start in 2025; Valencia, Spain, and St. Thomas, Canada, will follow soon. In future, the Salzgitter plant is to reach an annual capacity of up to 40 GWh—enough for about 500,000 electric vehicles. The three gigafactories in Europe and North America will have a total volume of up to 200 GWh.
Eckle pointed out that producing battery cells is a completely new business for Volkswagen. “It is not manufacturing cars anymore; it is chemistry. We go all the way from mining to the complete cell and recycling,” he said. At the same time, cell production is a very relevant topic for sustainability, so PowerCo has to make sure that the complete supply chain is committed to Volkswagen’s sustainability standards. The company’s scope will include new business models based around reusing discarded car batteries and recycling the valuable raw materials they contain.
The battery cell manufacturer started from scratch: 24 months ago, not only the factory had to be built but the staff for the startup company had to be recruited, too. Now there are about 1,500 employees in different areas, from research and development to operations, and they are the basis for building the company. The same applied to the IT landscape: it first had to be set up.
Standards Accelerate Implementation
Eckle said: “We have a very high demand that we need to satisfy for electric vehicles, and from our understanding this will only work if we have the right standards in place.” Stephan Fester, Global Battery Best Practice lead at SAP, who was on stage with Eckle, agreed: “Without standards you will never have the performance you need to set up a factory at this scale in no time.” Fester described how SAP and PowerCo connected in 2022 and defined a project scope for the first phase in only two days.
In 2023, the project team set up an SAP S/4HANA Cloud system and realized three go-lives. They began with the processes that a startup typically needs at once: “The first initiative was to manage and spend money and recruit, employ, and manage people,” Fester said. He told the audience that it was around March or April when the project partners heard of the big opening ceremony that was planned for the go-live of PowerCo.
With that hard deadline in mind, they started with the accelerated deployment service for recruiting, onboarding, and workforce management with SAP SuccessFactors solutions. “Normally this takes 12 weeks,” Fester recalled. “The SAP team said it normally takes at least eight weeks, but PowerCo challenged us with a time frame of only five weeks!’” This was a good example, he explained, of how a standard can accelerate implementation. They also set up material accounting, financial closing, and vendor invoice management.
“Another very important factor for success was that we as SAP wrote the concept according to our understanding of the requirements. PowerCo carried out a review and confirmed it,” Fester explained. “We didn’t ask PowerCo what it wanted, because it couldn’t specify that at the time. We understood the business and designed and implemented it based on our experience.”
Synchronize Business and IT Planning
In June 2023, the project team delivered the first version of logistics management. Fester explained the concept: “We synchronized the setup plan of the factory with the IT plan. If we know the first truck will arrive at the factory at a certain day, that means the capabilities to manage the truck and the material handling need to be available prior to that.”
Enhanced logistics were implemented in November, like in-warehouse processes, batch management, and returnable packaging management. At the beginning of 2024, integrated business planning went live, and more logistics processes were implemented. The next phase is already planned and set-up with product lifecycle management and other systems.
Fully Operational in Six Months
“We set up a cloud ERP system in less than six months, fully operational,” Fester said. PowerCo CIO Eckle added that this timeline only worked out because critical defects were resolved quickly and effectively in task force mode. The success of the SAP S/4HANA implementation project is also shown by the SAP Quality Award PowerCo received in 2024. “We are proud of what we have achieved,” Eckle concluded, “but we still have a long way to go. The Salzgitter factory opening is the first major milestone, with two other openings following.”
PowerCo is now well positioned for future business development. The current cloud ERP system serves as the central foundation for cell production. It will also support future business models like recycling of battery cells and the energy storage system business.
