BERLIN -- Volkswagen will invest almost 1 billion euros ($1.1 billion) in battery cell production in Germany, while seeking to slim down its multibrand group, the automaker said on Monday.
VW will set up the battery facility in Salzgitter, Lower Saxony, under a partnership, the automaker said in a statement on Monday after a supervisory board meeting.
VW plans to team up with Sweden’s Northvolt to start battery cell production in Salzgitter, a VW spokesman said.
VW executive board member Stefan Sommer told journalists that VW is already looking into opening additional battery production sites in Europe.
Battery cells are a key battleground in the automotive industry as it shifts to electric mobility. Currently the industry chiefly sources its requirements from Asian companies.
VW is also seeking to simplify the group by spinning off or selling units, the company said on Monday.
VW is looking into options for its MAN Energy Solutions business, which makes large diesel engines for ships and power generators, as well as transmissions maker Renk, including joint ventures, partnerships, a full or partial sale.
Reuters reported earlier this month that VW had approached several companies to gauge their interest in buying MAN Energy Solutions, which is expected to achieve a valuation of about 3 billion euros in a potential sale.
Truck unit IPO
VW also said on Monday it plans an initial public offering of its Traton trucks unit before the 2019 summer break.
The supervisory board and board of management agreed to prepare an Initial Public Offering (IPO)for Traton "subject to further market developments," VW said.
Finance Chief Frank Witter said "current market assessments" had encouraged VW to proceed with the IPO, which could yield up to 6 billion euros if a 25 percent stake is listed.
VW CEO Herbert Diess said would the automaker would invest the proceeds of the IPO in creating a global trucks business.
This could allow Volkswagen Truck & Bus to build a war chest to deepen its relationship with Navistar, a U.S. truckmaker in which it owns a 16.85 percent stake.
Jefferies analyst Philippe Houchois estimated Traton was worth 15 billion to 16 billion euros. "A listing should be positive as the current VW balance sheet is in our view a constraint on Traton's ability to execute on its 'Global Champion Strategy'," Houchois said.
In March, Volkswagen put the IPO on hold, citing market uncertainty, stalling what was expected to be Germany's biggest share offering this year.
The moves are part of Diess's efforts to slim down and simplify the group which has 12 brands, trucks, buses, motorbikes, cars and electric bicycles as part of its business.
"Given the ever greater complexity of our industry and the related challenges, it is essential to focus on our core business," Supervisory Board Chairman Hans Dieter Poetsch said.
VW's leadership has embraced a strategic shift towards e-mobility, which requires less manpower to produce cars, to help it shed the shadow of the diesel emissions test cheating scandal which damaged its finances and reputation.
Diess' predecessor Matthias Mueller failed to sell non-core assets like Ducati, stifled by supervisory board members from Lower Saxony and the company's labor representatives who control more than half the seats on the 20-member board.
VW labor chief Bernd Osterloh said he would agree to divestments and a transformation if the terms and conditions for employees in units which have been earmarked for disposal are not watered down and if there is industrial logic behind the deal.