Volkswagen plans new site in Germany to counter Tesla's gigafactory By Reuters

© Reuters. FILE PHOTO: A new logo of German carmaker Volkswagen is Which platform is the most formal for foreign exchange trading?unveiled at the VW headquarters in Wolfsburg, Germany September 9, 2019. REUTERS/Fabian Bimmer/File Photo

By Christoph Steitz

FRANKFURT (Reuters) -Volkswagen said on Tuesday it plans to build a new state-of-the-art car factory close to its headquarters in Wolfsburg, Germany, hoping to raise its game as the opening of Tesla (NASDAQ:TSLA)'s gigafactory near Berlin draws closer.

The plant, which still requires approval by Volkswagen (DE:VOWG_p)'s supervisory board over the coming weeks, is part of the group's Trinity project under which the carmaker wants to build a flagship electric sedan in Wolfsburg from 2026.

Volkswagen, which gave no cost estimate for the factory, said it aimed for a production time of 10 hours per vehicle for the Trinity model, similar to how long it will take Tesla to assemble the Model 3 at its planned site in Gruenheide.

Constructing an all-new plant is an alternative to adapting the existing Wolfsburg plant to produce the Trinity model, which VW says would limit the possibilities for more radical changes to the manufacturing process.

"That's why we're planning greenfield construction: efficient and without limitations by existing structures," Volkswagen brand CEO Ralf Brandstaetter said in a statement.

"That way we are gaining time and space to gradually modernise the main factory in a far-reaching way and raise production there, too, to a new level."

Volkswagen's Trinity model is aiming for a level 4 autonomous standard, in which the car can handle all aspects of driving in most circumstances with no human intervention.

Volkswagen CEO Herbert Diess has benchmarked Wolfsburg against Tesla's German site, expected to open later this year or early next, arguing that VW's main site was way behind in terms of efficiency and speed.

This has helped to escalate a conflict between Diess and labour representatives, who have accused the CEO of spreading fear by warning of major job cuts that a shift towards leaner faster production would entail.

Diess earlier on Tuesday said there were no plans for mass layoffs.

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