- [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)