The German government has announced a €1bn investment to support local battery cell production, with the aim of reducing its auto industry’s reliance on cells from Asia.
It is set to back a consortium involving German battery-maker VARTA Microbattery, chemical giant BASF and Ford's German subsidiary Ford-Werke GmbH. According to reports, this would focus on solid-state technology – a kind of battery with higher energy density, longer driving range and greater safety standards than the lithium-ion batteries currently used in most electric vehicles.
Economy Minister Peter Altmaier, speaking to Reuters on Tuesday, said the government wants to ‘lay the groundwork in the months ahead for large-scale battery production in Europe and expected such production to start in Germany from 2021.’
Up to now, Germany’s automotive giants have been reluctant to invest the large amounts necessary to produce EV battery cells. Some efforts have been made, but these are more indirect, such as BMW’s $1bn battery supply contract with China’s largest battery cell manufacturer CATL.
And there are other projects currently in the pipeline. Tesla has already announced its plans to establish a European Gigafactory for EV and battery production, and is looking at Germany as a possible location. Meanwhile, TerraE Holding GmbH has announced plans for a huge new battery factory with planned capacity of 34 GWh when it reaches full production.
But there are still some voices of caution regarding the investment. Among them, Jens Weinmann, Programme Director of the Berlin-based European School of Management and Technology, who warned about the fierce competition in the commodity market. ‘We have had some experience with trying to establish production in Germany’, he said, and it had ‘failed miserably’.
He cited, for example, Daimler subsidiary Li-Tec’s attempts to production lithium-ion battery cells from a factory in Saxony, which was forced to close in 2015 owing to high operating costs.
On the other hand, Stefan Bratzel, head of Germany’s Center of Automotive Mangement, believes taking control of domestic battery cell production is essential to the Germany auto industry and also feels it has the capability to catch up with the Asian players.
‘It’s really a race that Germany has to begin now,’ he says, ‘and maybe in nine or 10 years it will be able to compete.’