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)