Volkswagen AG (ETR:VOW3)
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Investor update

Jul 7, 2022

Sophie Uhlig
Cell Developer, Volkswagen

Hi, my name is Sophie. I'm 30 years old. Thank you. When I take a look at the future, then I'm pretty happy with it. Of course, I would like to visit all American national parks and do so 100% emission-free. It would be cool if, with my grandchildren, I was able to look at these pictures. At the moment, unfortunately, it's still a dream, and we all know that there are a couple of steps ahead of us. I am pretty certain that together we'll be able to do it. I myself, I'm very proud to be part of this. For this special occasion, we also have special guests of honor. I am very pleased to welcome Chancellor Olaf Scholz. Welcome in Salzgitter. We'd like to welcome the Head of our Board of Management, Dr. Herbert Diess. Welcome to you.

Our Group Board of Management member for Technology, Thomas Schmall. What do we want to do with you? To this end, I would like to ask our Group Board of Management member, Thomas Schmall, to the stage. Hi, Thomas.

Thomas Schmall
Member of the Board of Management for Technology, Volkswagen

Hi, Sophie. Sophie, you are cell developer.

Sophie Uhlig
Cell Developer, Volkswagen

Yes, that's true.

Thomas Schmall
Member of the Board of Management for Technology, Volkswagen

You've been here with us for two years. What have you studied?

Sophie Uhlig
Cell Developer, Volkswagen

At Technische Universität Braunschweig, I studied chemical engineering. Chemical engineering, the heart of engine production of Volkswagen. We take it seriously with 100% transformation, moving from ICEs to cell.

Thomas Schmall
Member of the Board of Management for Technology, Volkswagen

Sophie, thank you so much. Ladies and gentlemen, I would also like to say welcome to this event today, to the Mission Salzgiga event. Mission Salzgiga is more than just laying the foundation stone and breaking ground.

With the newly created PowerCo SE and the Worldwide Battery Center here in Salzgitter, it is the start for us to move into a new era. From today onwards, this will be the central site for the worldwide battery business of the Volkswagen Group. One of the biggest companies somewhat reinvents itself and thus writes a new chapter of industrial history. It's a big story and a very big challenge for me, just like for many other colleagues. We have asked our employees at this site how they see transformation and what the Head of Plant, Andreas Salewsky, what the Head of the Works Council, Dirk Windmüller, and the Mayor of Salzgitter, Frank Klingebiel, say. Let's roll the film.

Andreas Salewsky
Plant Manager, Volkswagen

If we no longer produce internal combustion engines here in Salzgitter, we will certainly miss a whole lot.

Dirk Windmüller
Chairman of the Works Council, Volkswagen

Many say, "Oh, I'm afraid. I don't know what will happen.

Frank Klingebiel
Lord Mayor, City of Salzgitter

People are actually always looking for security, for stability, and change is basically not scary, but worrying.

Andreas Salewsky
Plant Manager, Volkswagen

My wish for the future is that I have a secure job.

Frank Klingebiel
Lord Mayor, City of Salzgitter

Regarding the transition to the battery cell, I'm very curious what the future will bring.

Andreas Salewsky
Plant Manager, Volkswagen

On the other hand, I am also for development, and that is where my heart is beating right now.

Frank Klingebiel
Lord Mayor, City of Salzgitter

From 100% engine to 100% battery.

Dirk Windmüller
Chairman of the Works Council, Volkswagen

We have to do it for the sake of the environment, and it has to move forward quickly, and we will definitely achieve success with it.

Frank Klingebiel
Lord Mayor, City of Salzgitter

Here at Volkswagen, Salzgitter, we are showing a positive and important example of a fair transition to e-mobility.

Andreas Salewsky
Plant Manager, Volkswagen

Volkswagen is really well positioned, and I actually look optimistically to the future.

Dirk Windmüller
Chairman of the Works Council, Volkswagen

Transformation is important to understand as an opportunity and not as a risk.

We are shaping prospects for our colleagues together. We, as the works council and the workforce, have stood up for this, because our site is close to our hearts.

Speaker 6

In such a battery cell development, you meet really young, innovative, diverse, colorful people.

Frank Klingebiel
Lord Mayor, City of Salzgitter

And how enthusiastic the employees actually are about it, that makes me quite proud.

Speaker 6

I wish for the site that we can implement the transformation with the strength that has made us successful here at the site for decades.

Salzgitter, from the engine to the battery cell.

Thomas Schmall
Member of the Board of Management for Technology, Volkswagen

As you see, transformation has lots of different facets and is very diverse, and it's this diversity what makes us strong as a society and as a company. The components site in Lower Saxony in 2020, we have already 20% of the jobs transformed into e-mobility. In three years, up until 2025, we will have more than 50% of the workforce in the components site be working on e-mobility areas. And that's a good transfer to our site of Lower Saxony, to our land, Lower Saxony, to Stephan Weil, the premier. The stage is yours.

Stephan Weil
Minister-President of Lower Saxony, State of Lower Saxony

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Mr. Chancellor, Mr. Scholz, dear colleagues from the federal state government and from the parliaments, Mr. Diess and all the members of the board of management. Hello, Daniela Cavallo and all the works councilors. Ladies and gentlemen. This is undeniably a very important day for Volkswagen today. Going far beyond it is very important for the plant in Salzgitter, for the federal state of Lower Saxony, and one of the most spectacular industrial decisions that have been taken in recent years in Germany. Lower Saxony is a state that depends on cars. Our success is very much dependent on the success of the largest company in this federal state of Volkswagen, and we have benefited from this for many years. We have thought about the transformation process in this federal state, but the fact that this caused some fears and concerns is obvious.

Salzgitter is a very good example because it is a traditional site and has been for more than 50 years. This is where we have manufactured engines, more than 62 million in total up until today, as I was told. If there is no true future prospect for internal combustion engines, the question is, what will happen? Will there be no future prospect for us in Salzgitter? What we experience today is a convincing answer to that question. Up until today, the engine was the most important component of the car. In the future, it will be the battery with a share of 40% of the added value. This is why at first glance it is a very obvious decision to say that if we now put a focus on the most important component, we will also put a focus on the most important component in the future.

What does this mean? At a huge construction site, a huge battery cell factory will be built. This is what begins today, but a lot more is beginning. The strategic decision was taken that Salzgitter will become the site for the battery activities of the Volkswagen Group entirely, with a whole plethora of connected activities, that is. Especially with a new company which is going to be created, and that is PowerCo, a company that is going to provide a hub for activities the world over. This is going to be one of the most interesting startups in Germany within this century. We can already say that today. It is a whole package, the beginning of which we celebrate today. The answer to the question of what is going to happen in the future is quite essential. How about structural change?

If you want to bring it about successfully, do it the way they did it in Salzgitter. Let me congratulate all of you in the company, the management, the workers representatives. This was really a gigantic task forward, a major effort of all of us. We managed to achieve a lot. Thanks a lot to all of you on behalf of the federal state of Lower Saxony. Ladies and gentlemen, Volkswagen is on its way towards the new world of automobiles step by step. Today is a very important quantum leap, but we also do know that a lot remains to be done. I don't know what you feel like, but everything I'm seeing today and everything I know about the further development of the battery activities of Volkswagen makes me be positive. Lower Saxony is an automotive federal state.

It will continue to do so digitally, emissions free, and most definitely very successful. Thank you very much for your attention.

Sophie Uhlig
Cell Developer, Volkswagen

Thank you very much, Premier. He said it, Salzgitter site. What is the Salzgitter site? We have prepared a little film for you that shows how strong we go for transformation already.

Speaker 8

Beautiful drone footage is one thing, but there's definitely more to tell here. On an area the size of 30 football fields, the Volkswagen battery center with its own gigafactory will be created, with 40 GWh of capacity. That's easily enough for up to 500,000 EV vehicles a year. This is Mission Salzgiga. High technology made in Salzgitter. That has tradition. Salzgitter owes its origins to pioneers like Andreas, who, together with colleagues, has built more than 60 million engines to this day.

Andreas Salewsky
Plant Manager, Volkswagen

63,639,239. We can do a few more today.

Speaker 8

Wow. Look at that. They delivered all the engines for that. If anyone in Salzgitter can do one thing, it is innovation and mass production. Today, Salzgitter has long since arrived in e-mobility [Non-English content ]

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Sophie Uhlig
Cell Developer, Volkswagen

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Speaker 8

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Thomas Schmall
Member of the Board of Management for Technology, Volkswagen

Thank you. Now you got a bit of an idea as to how transformation this Salzgitter site looks like. We do just that. We have the first gigafactory here in Salzgitter. It has got two blocks and will have 24 GWh. Each of these blocks will produce about 22 million cells, 44 million cells on 40 hectares of ground, 600 meters long, 350 meters wide. That is a medium-sized factory in this business. What is the key in order to do it in the necessary speed and in the time allotted to us? It is two big keys, two big levers. It is a technology roadmap, which we will hear about with our unified cell format, low complexity, high degree of standardization, differentiation through what is inside the cell, so chemistry and high standards in the factory. I just said it when we walked around.

When you see a cell factory that is of Volkswagen, you might think you have seen it before because it will look exactly like the one in Salzgitter. That is what we have to do. It is the only opportunity, the only chance we have to do this and to be as fast as possible in setting it up. In Salzgitter, we will do more than just a cell factory. It is going to be a global battery hub of ours. What does it mean?

We show it in a jigsaw. In the middle, you have the cell factory that I described. We will have a test center, we will have pilot lines to test the batteries. Of course, we will have research and development here. We have an academy to train people. We will have a supplier park in order to do housings and other things next to the plant.

We have a recycling plant we heard about, and all of this will be included in PowerCo, our European SE, which has been started in January with a board of management that will introduce themselves to you. This is our guarantee, together with factory, to do everything that we see today. PowerCo is going to be a global player. We will not just do the volume for Volkswagen in Europe. We will do it beyond. We have plans after the six gigafactories to move to other regions with PowerCo. In Salzgitter, a blueprint version will be created for the factories. Just to give you a couple of numbers for Europe, for six factories, we need about EUR 20 billion by way of CapEx. We will have a revenue potential of at least EUR 20 billion from this business and in Europe, 20,000 jobs in this business will be created.

Jobs that do not exist in Europe today. A technology that is only available to a very limited extent in Germany and in Europe. As Volkswagen, we assume responsibility for this technology in Germany for Volkswagen, then we scale it up in the rollout. Why are we doing this? Well, ladies and gentlemen, there is no planet B. There is no alternative, which is why we form PowerCo batteries for generations to come. Thank you very much. How will such a battery be produced? What have we done? We asked children of our employees from the cell business as to whether their parents explain it to them. That is what you see in the film. How is a battery created?

Speaker 8

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First of all, we are going to get the LEGO pieces and put it on top of the platforms.

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Every battery needs liquid to function properly. Now let's test out the battery if it functions properly. [Non-English content] Why in the world should I know? Ask the Volkswagen team.

Sophie Uhlig
Cell Developer, Volkswagen

Our cell developers of the future. What we see with the system is that our cell developers can come from 20 different nations, 50% come from East Asian countries and the remaining members from the rest of the world. Our team is already international. But who could explain this better to you than our CEO of PowerCo, Frank Blome. Please, the stage is yours, and don't make it too complicated, please.

Frank Blome
CEO, PowerCo

I'd also like to welcome you members cordially to today's big event in Salzgitter for Salzgitter. You see, we don't have to really take too much care of the up and coming. They're already ready for it, and they came up with a very good explanation. Our unified cell is just a toolkit for batteries and battery cells, just like as the LEGO toolkit of the kids who showed us what the cell is all about. 80% of our vehicles will be equipped with the unified cell. With the help of the chemistry of the cell, we will inform the performance and the costs. In line with the strategy of the Volkswagen modular platform, we will build the factories, we design the battery cells for the future.

This will be possible for us to produce at best costs in a robust fashion, safely and securely, with regards to our products and the building of our factories. We make cell production simpler, we make it more flexible, we make it big and green. For that purpose, we have developed keys. Thomas Schmall made mention of them already. We have got the unified cell and the standard factory. The unified cell provides quantitively forward. With a unified cell, we reach higher energy densities, we can increase our efficiency, we can reduce charging times, increase the range, and we combine all that with a top security and safety level for our electric vehicles. This makes PowerCo flexible. Flexibility, especially in volatile times, is quite a decisive factor. Sustainability is the third important lever of our product strategy.

For the entire value chain, we want to set up sustainable industrial sites. The PowerCo will thus be based on a very sustainable and solid foundation. What or who is PowerCo? We have taken the best experts on board, and let me present them to you.

Murat Aksel
Head of Group Purchasing, Volkswagen

Cathode, anode, electrolyte. Everything starts with raw material, mining, and processing. This industry does not exist yet at this scale. We are, as a purchasing team, safeguard sustainable and responsible delivery of all materials, suppliers, and strategic partners.

Soonho Ahn
Chief Technology Officer, PowerCo

I believe this is one of the biggest and most exciting startups in Europe. We are bringing cell production to Europe for the European automotive industry to be competitive over the coming years and decades to come. The aim of our team is to have all the funding in place to make this transition happen. We are very proud that it already has caused significant interest in the market and it has inspired investors.

I joined PowerCo from Apple, so naturally, I used to build small cells. With this PowerCo, I get to build large cells which are more important to automobiles and for our environment. I feel really powered up because all my career is about battery development, from materials, chemistry, and cell design. With this new unified cell approach, we are about to set a benchmark and new industry standard.

Finding the right people with the right skills for PowerCo is one of the most important tasks for us in HR. It is about much more. We want to establish a modern organization and a corporate culture that offers our international teams the best working conditions. To say it very simple, we want to make PowerCo the most attractive employer in the battery cell business.

In operations, we are planning, installing, and operating all battery cell factories this summer. We have designed a standard factory concept to maximize economies of scale while minimizing CapEx spend and maximizing interchangeabilities of all production lines. All battery factories will be equipped through our battery equipment powerhouse, which we are currently setting up. We are convinced to have the most standardized and cost-efficient battery cell network globally.

Frank Blome
CEO, PowerCo

Ladies and gentlemen, we are PowerCo. Now I would like to tell you a little more about the standard factory. Now I would like to tell you a little bit more about the standard factory. The standard factory in Salzgitter, as today's event, constitute the milestone of our battery cell strategy. The unified cell helps us standardize products, and the factory, the standard factory, helps to standardize building, production processes, even production equipment, and the infrastructure of the factory.

This is how we are able to scale up rather quickly and learn rather quickly in order to produce the best product in class as soon as possible. Starting off with today, the ramp-up time from the approval of a factory leading all the way up to the SOP will be reduced from three years to 18 months. It will be halved. An operations strategy could not be any more robust. Of course, you all know, e-mobility can only be emissions free if it covers the entire supply chain leading all the way up to the production of the cell and the charging station. This is why the electricity we use for our plants comes from renewable sources of energy. Sustainability economical activities also means that we reuse scarce resources.

That is why already today, we use the battery recycling plant in Salzgitter in order to reuse and recycle the materials of our batteries for the production of the batteries of tomorrow. The battery cell will be made sustainable because we want to think of the very last step of e-mobility, and that is why PowerCo stands for batteries for generations to come. Now, let me thank you for your attention and pass the floor to Daniela Cavallo, the chairperson of the General and Group Works Council. Thank you.

Daniela Cavallo
Chair of the Central Works Council, Volkswagen

Very dear Chancellor Scholz. Chancellor Scholz, dear Olaf. Premier Weil, dear Stephan. Mayor Klingebiel, Dr. Diess, members of the supervisory board and the board of management, guests, and most of all, dear colleagues. Today, the 7th of July, 2022, is a historic day for Volkswagen in Salzgitter. It's a wonderful day for the entire Volkswagen Group, for Volkswagen's home, Lower Saxony, and for Germany as a location for industry. What we celebrate today is evidence that with Salzgitter, the deep transformation, the change of our industry, is not a dramatic one. We show that ecological and social change can be put together, that it doesn't exclude each other. Now in Salzgitter, we have the biggest engine plant of the Volkswagen brand. More than 63 million engines were built by this proud factory since the 1970s. Various generations of colleagues worked here throughout their entire lives.

Four cylinder, big, giant 16 cylinder engines. We build drives for customers all over the world, about 1 million units per year. Our workforce in Salzgitter has 6,829 colleagues on board. That means 6,829 times questions, what's going to happen with the Salzgitter plant? What's going to happen to me personally? Where is my personal outlook for the future? The answer is, today's start of the building of our very own cell factory shows the start of the cell drive directly next to our factory, the factory for the drives of tomorrow. That means new employment. Thus, Salzgitter has a future and an outlook for the future, and this was not self-evident at some point of time. It was hard work. And this is also quite decisively the success of strong co-determination in this group, ladies and gentlemen.

Today, we are breaking ground symbolically on the field or outside or here on the stage, but the real foundation was laid by the Works Council more than 12 years ago. In April 2010, the Works Council, for the first time publicly, made the demand that Volkswagen was supposed to build a battery factory. Our reason back then was be able to move into the future, reduce dependency on suppliers, control prices in a better way, and secure employment. It's exactly what you can read about in the press statement of the group for this meeting. But it was a long and stony path to get there. I'd like to remind you of one statement that is not even six years old.

On the topic of our own battery cell factory back then, the statement was, "We are not going to do such a crazy thing." It was said by the then group CEO. Dr. Diess is laughing already. Of course, the then CEO is no longer with us, and now it's no longer something crazy. It is core of our group strategy. At this point, I would therefore like to say to the group board management member for technology, Mr. Schmall, I would like to thank you. You know, Mr. Schmall, that some of the previous people who were in your position wanted to not do it. Today, everyone envies us when it comes to components. Truth is that the first cell factory is coming to Salzgitter. That's what we worked for, what we worked towards, because employment security is just as important as economic feasibility.

The state of Lower Saxony and the Works Council agrees that the Volkswagen home is the point to develop the future for Volkswagen. Our heart is beating between the Harz Mountains and the coastal regions. Yesterday, today, and tomorrow, this is going to be the case. Stephan Weil, the state and you are a firm and reliable partner for us. That cell production, the Volkswagen collective bargaining agreement is being applied, didn't fall down from the skies. Just like the cell factory is going to be part of the Volkswagen Group. The important work for cell components in our Center of Excellence is mainly due to the work done by the Works Council. We have done that in our Pact for the Future. We agreed upon it together with management in the year 2016 already, with the obligation to serial production.

Dirk Windmüller, as the local chair of the Works Council, you have worked with your team and accompanied the situation with your team. The success of today is mainly the success of the workforce. You are going along, you're doing the work, you are in the middle of transformation of our components plants, and you are the spearhead. The automotive world is looking to Salzgitter, at least our competitors from Europe. Volkswagen shows in Salzgitter how transformation can work. Lots is being said towards e-mobility. Here and today, it is actually happening in very concrete terms, like it will happen earlier or later in all of our sites, whether they build cars or build parts. We've done the previous work. Now the start is here, and now it's all about to move forward.

Decisive is a pioneering spirit, qualification, further training, courage to change, work as team players, and also play a good role and in co-determining. This, we have achieved with Volkswagen, which is why we will continue with our success from Salzgitter, because we do have a perspective for our workforce to move forward in employment security and economic feasibility. I dare to give you one suggestion. If e-mobility happens as fast as it looks like, then we have best opportunities at Volkswagen to benefit from the transformation with a healthy outlook for all of our sites and with a long-term, motivated workforce. So colleagues, ladies and gentlemen, today is a day where we can be happy, proud, and celebrate. Thank you so much.

Herbert Diess
CEO, Volkswagen

Mr. Chancellor Scholz, dear members of the Volkswagen Supervisory Board, dear colleagues from the Board of Management, and hello to all the employees from Salzgitter. This is a very special day for Volkswagen, for Salzgitter, for the industrial side of Germany, and for our competitiveness of Europe in the world. We are building our first battery factory. Obviously, you can see here in Salzgitter how profound the transformation process of our industrial sector is, and Volkswagen is one of the drivers of this transformation process. Over the recent decades, we were car manufacturers and we sold cars, and thus we've generated prosperity for generations. It is necessary for us to change and bring about a transformation process in order to preserve prosperity for generations to come. The car continues to be our core competence, but it becomes electric, autonomous.

It will become the most complex digital product the world over. We will also become a software manufacturer, and due to the starting point here in Salzgitter, we will also become a battery manufacturer. These are completely new competencies that we've got to build up in a couple of years only. Salzgiga will become our power center. From here, we start and control the worldwide battery strategy.

That is why we create the PowerCo. We, with green electricity, create a prismatic cell battery for the entire group. Due to the large scales, we can become more cost efficient compared to our competitors. The battery, apart from the software, will be the value driver within the car. This is why we want to keep control. Raw material processing, development, the setup and the control of the gigafactories, as well as recycling. Thomas Schmall and his team will be responsible for these issues within the entire group. This is how we want to secure jobs in the long run. In Salzgitter alone, with the help of our battery factory, 5,000 future-oriented jobs can be created. Throughout the whole of Europe, it will be even 20,000. Together with partners, PowerCo, up until 2030, will invest more than EUR 20 billion in the establishment of our battery business.

Up until 2025, the demand of batteries in the Volkswagen Group is secured. For the time afterwards, we intend to build up six additional factories like here throughout the whole of Europe with an entire production performance of 240 GWh , also in the United States, that we want to set up a cell manufacturing plant. Mr. Scholz, we are particularly happy that you add to this historic dimension of this development with your presence by attending this meeting. Germany and Europe can only continue to be competitive based on courageous decisions and innovation. Already today, with regards to equipment and machines for the establishment of such a battery factory, we depend on Asia. Same holds true for the supply of some raw materials.

If we in Germany and Europe do not want to be lagging behind China and the U.S., we have to bank even more on future-oriented technologies and do away with red tape. Clear decisions and strong signs of policy makers for the battery, the establishment of our software competence, and first of all, investments into renewable sources of energy, are decisive for the future of Europe. Therefore, I would like to thank you most cordially for your positive attitude. You can be assured Volkswagen is a strong partner and will continue to be so. In the future, we also want to be proud of made in Germany. The highly motivated staff members of Salzgitter, who up until recently built combustion engines and will soon begin to produce battery cells, make me feel confident that we will emerge out of this transformation process stronger than ever.

Salzgitter will become a transformation role model. With exactly this power will we continue to be competitive. Thank you very much. Mr. Chancellor, the floor is yours.

Olaf Scholz
Chancellor, Federal Republic of Germany

Mr. Diess, Mr. Schmall, Mr. Blome, Ms. Cavallo, Premier, Mayor, employees, ladies and gentlemen, and colleagues, of course. I am very happy to be here today in Salzgitter. This gives me the opportunity to talk about a car that we were able to see quite briefly and that I remember from my car games. As many others, I am old enough to remember it and to have seen it in the early 70s of the last century in Germany. Those were times of moving forward culturally, politically, in science, in economics, in design. Progress, modernity and modern times, renewal. That was the feeling we had in those days, in those years. This became evident even today in very specific sights and objects and symbols. Just think of the wonderful Munich Olympia grounds developed by the architect Günter Behnisch.

It was easy, it was transparent, it was open, it had clear lines. The stadium of 1972 shows the new spirit of those years to a specific amount. This brings us back to the Volkswagen K70, because for that, the same is true. Even if it did not sell that well, it was clear and clean and lean in the 70s. Aesthetically, it was showing a new spirit, a new start, and technology-wise, it was the same. It actually meant revolution. Until then, Volkswagen had air-cooled rear engines. Now, the K70 was the first Volkswagen with front-engine, water-cooled, a concept which was actually proving to be the one for the future. All the Volkswagen success models, the Golf, the Passat, to name the first ones, would have been impossible without the K70 to break the ground. You all know this progressive car was produced in this plant in Salzgitter.

It was developed specifically for that. This Volkswagen plant stands for a courageous new start with an open end initially, which proves to be successful and showing the way forward for the entire group. This is your history here in Salzgitter, and it bodes well for the future. Because the situation is somewhat similar now. Together, we will lay the foundation stone for the future of mobility, again, coming back to Salzgitter. It is clear to everyone that this future has to be sustainable and saving the climate, which is why Germany decided to be zero carbon country till 2045. We won't do it on our own because that won't stop climate change. We do that in a closely coordinated fashion with our partners in Europe and worldwide.

In hardly any other industry, transformation and change that is necessary for that will be so far reaching than in automotive industry. It's clear because this plant, up until today, provides combustion engines, internal combustion engines. About half of the Volkswagen engines come from here. More than 60 million engines came from Salzgitter since the 1970s. What a proud industrial achievement. But we know that burning fossil fuels will come to its end. All of the big automotive companies have decided to go towards e-mobility, and that includes Volkswagen. Just how important the consequences of this will be can be seen in Salzgitter. Many thousand jobs depend on technology which needs to fight for its future, and Volkswagen has seen it. That's why you decided to move from the engine plant to the center of all battery electricity activities of the group.

This means a radical 180-degree turnaround, and I know this turnaround means a major challenge for everyone. Some might be concerned looking at the sheer magnitude of the task that's ahead of you. Will it all be happening? Will it be going well for me, for my family, for my region? I want to say, yes, it can be good, and it will be good with one prerequisite. The prerequisite being that we do not just look back, but that we actually go forward full throttle and move forward wholeheartedly. That's what you've always done with Volkswagen. Otherwise, the air-cooled rear engine would have been here forever. Otherwise, the trailblazing K70 would not have existed. Otherwise, this plant in Salzgitter would have never been erected.

It's not so long ago that many people in Germany were of the opinion battery cells were these are random supplier parts, we can simply order them from Asia whenever we need them. Today, we know much better. Latest, the Corona pandemic and Russia's brutal attack on Ukraine make it clear, depending on worldwide supply chain mean a major risk on many strategic areas and sometimes too big a risk. For battery cells, I'm sure this is clearly the case, which to all of you, the employees of the Volkswagen plant here in Salzgitter, all of you have a very significant task because it's not a good situation when a ship, a container vessel stranded in the Suez Canal provides difficulties to us on our way to e-mobility. We want that up until the year 2030, 15 million electric cars will be in Germany on our roads and streets.

We want added value and jobs staying here in Germany and Europe. We want to do the transformation of the climate and stay an industrial country at the same time. Therefore, it is clear we need our own battery cell production here in Europe, here in Germany and here with you in Salzgitter. Employees, Volkswagen and Salzgitter, that's a very close connection. Many have been working their entire vocational or professional life for this company in the second or third generation, together with brothers and sisters and in-laws and cousins. Some have parents, aunts, and uncles who have worked on the first car, the K70. Volkswagen is decisive for this entire region, has been so for Hanover, Braunschweig, Wolfsburg, and Salzgitter for decades, and you are all Volkswagen.

You all every single day give to your company what Volkswagen needs in order to move forward and be strong in the transformation and move out of it even stronger. Every single person makes a contribution so that in this big transformation, industry will stay the backbone of our world here. Transformation, yes, but that's an abstract term, even if it's used very often by managers and politicians. But for what is connected to it, politicians can set the right stage. That's true. But it is you. You are the ones who will do the work, who will do the change towards zero carbon industry, zero carbon society, and we need to be very respectful to you, very grateful, and we have to give you all the support you can get. Now, Salzgitter is at a next big turning point. You'll open a new chapter of progress.

You can be proud of that, very proud. I wish Volkswagen, the Salzgitter site, and all of you all the best. Thank you very much.

Thomas Schmall
Member of the Board of Management for Technology, Volkswagen

[Non-English content ] Thank you very much, Mr. Chancellor, for your moving statement. The people sitting in this room are showing what you spoke about. Now onto the symbolic groundbreaking activity here for our plant in Salzgitter, what we've just described, our unified site, is up here on the table. Dr. Diess, Ms. Cavallo, Stephan Weil, Frank Blome, please join me here on the stage. Sophie of course as well. Come up here. Right, here we go. Now, one by one, let's get some power going. Sophie, please, put the first cell into the system. Power go. Secondly, our premier, Stephan Weil. Thirdly, Daniela Cavallo, on behalf of the Works Council. Dr. Diess. The last but one cell is yours. Now, Mr. Chancellor [Non-English content ] Thank you so much.

The protagonists of today, the children, the parents, the members of the board of PowerCo, please join me up here on stage. Sit down on the stairs. Please join me up here because we'd like to take a group picture. Thank you very much.