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Volkswagen is reportedly considering building a dedicated factory to churn out batteries for electric vehicles (EVs).

According to Deutsche Welle, executives within the car maker have anonymously told the German Press Agency (DPA) that Volkswagen Group is considering constructing a battery factory in its home state of Lower Saxony.

Estimated to cost up to 10 billion euros (AUD$15.5 billion), the new plant will produce cells for Volkswagen’s upcoming range of EVs.

Handelsblatt, a German business newspaper, believes that the car maker is considering this expensive option so that it doesn’t become reliant on Asian battery producers, such as Panasonic and LG Chem, who currently supply much of the automotive market.

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Above: Volkswagen Budd-e concept.

Volkswagen is currently drawing up plans, including this ‘major initiative’, that will enable it to sell a million electric vehicles within the next 10 years. Volkswagen’s board will consider this latest EV strategy at a meeting prior to the car maker’s annual general meeting on June 22.

The company is currently busy preparing a new electric vehicle component set, known as MEB, which will underpin a wave of electric vehicles across the Volkswagen Group. So far, the car maker has unveiled a number of electric concepts, including the fully-electric Budd-e people-mover and the plug-in-hybrid Tiguan GTE.

Volkswagen’s pivot away from diesel engines to EVs is widely seen as a response to the dieselgate saga, which has engulfed the company since its admission in September 2015 that it used defeat devices to cheat its way past emissions testing in the US.

Currently, Germany’s adoption of electric cars has lagged behind some of its Euro-zone compatriots, such as Norway. Last week, the German government and car manufacturers announced an EV incentives package, worth around a billion euros (AUD$1.6 billion), which includes funding for a new charging station network and rebates for buyers.

The new plant, if it comes to fruition, will likely be built in Salzgitter, a city in the state of Lower Saxony. The company is headquartered in Wolfsburg, also located in Lower Saxony, and the German state controls around 20 per cent of Volkswagen’s voting stock.

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