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Germany and France Try to Jump-start Battery Production
The engine and battery for an e-Golf electric car are pictured at the new production line of the Transparent Factory of German carmaker Volkswagen in Dresden, Germany. Photo © FABRIZIO BENSCH/REUTERS/Newscom

Germany and France Try to Jump-start Battery Production

By Simon Johns - Nov 19, 2018

Concerned that their industries are falling behind Asia, Germany and France announced initiatives in November to help European companies jump into the business of making batteries for electric vehicles.

On Nov. 13, German Economy Minister Peter Altmaier announced that the country will provide €1 billion through 2021 to support production of battery cells for electric vehicles by German companies. Then on Nov. 22, French Energy Minister François de Rugy called for the formation of a European consortium to supply EV batteries.

Both officials expressed worries that European companies are not keeping up with Asian battery manufacturers and that Europe risks falling further behind in its capability to provide a key component of EVs. 

Their governments are looking to make quick impacts. France said it wants to see progress toward the formation of a consortium early in 2019. German officials said they aim to lay the groundwork for large-scale production in the coming months, with manufacturing to begin by 2021.

Europe, along with East Asia and North America, is a hub for the burgeoning EV industry. Several European countries rank among the 10 largest EV markets, and most European automakers are introducing hybrids and pure electric cars.

But Asian companies such as Panasonic, CATL, LG Chem and BYD, along with United States-based Tesla, are leading the way in the manufacturing of lithium-ion batteries used in EVs. That has forced European automakers to go outside the region to secure battery supply. For example, China-based CATL agreed to build a factory in Erfurt, Germany, as part of a €4.7 billion deal to supply lithium-ion batteries to German automaker BMW. Announced in July 2018, the deal calls for BMW to purchase that amount of batteries from CATL over the next few years, with €1.5 billion of them coming from Erfurt.

German and French officials say it is important for European companies to gain the technology and manufacturing capability to supply such batteries, especially with EV sales projected to continue increasing rapidly.

“It must be at the European level because the French market alone will not be enough,” de Rugy said.

One start-up is already positioning itself to request some of the German funding: Terra E. The company has been working to assemble its own consortium to build a battery factory in Dresden that would scale up to 34 gigawatt hours per year by 2028. Terra E was acquired by battery maker BMZ after scrapping a shareholder agreement with investors who failed to fund the factory.

“BMZ and TerraE are already in contact with Mr. Altmaier and hope we can fix the first investments,” BMZ founder and CEO Sven Bauer told Lubes’n’Greases

The region’s larger battery makers have been less eager to throw their weight into the new technologies. Varta, which is also based in Germany, is the region’s leading manufacturer of lead-acid batteries, which are used in vehicles powered by internal combustion engines and in hybrids that also contain ICEs. Varta does make 48-volt lithium-ion batteries used in mild hybrids, but has not yet segued into larger lithium-ion batteries used in purely battery-powered cars. Those batteries are based on a different technology and, as the company has noted, are still used in far smaller numbers.