Assault on battery

EU backs German plan to subsidize e-car battery production

main 26572257 DPA – Peter Altmaier Economics Minister Germany auto cars electric batteries production EU aid state subsidies
The Economics Minister has just secured the batteries for his next car. Source: DPA

The European Commission is ready to back Germany’s plan to provide state aid for production of the battery cells needed to power electric vehicles. Economics Minister Peter Altmaier has won an exemption from the European Union’s strict ban on state aid to support the seminal technology as long as at least two EU countries are involved.

Commission Vice President Maros Sefcovic confirmed to Handelsblatt that the commission would not block Mr. Altmaier’s plan after he met several times with Brussels officials to explain it. Competition Commissioner Margrethe Vestager, who meticulously enforces EU rules, is on board.

German companies, such as the world’s largest car-parts maker Bosch, have been reluctant to enter into a field dominated by Asian producers such as Samsung, Panasonic and China’s CATL, because of the massive investment required for what has become a commodity product with meager returns.

Count the possible loss

“The argument is often that you can’t make much money with batteries,” said Maximilian Fichtner, director of the Helmholtz Institutes for Battery Research. “But the more important question is what we lose if you don’t.”

For one thing, the transition to electric vehicles from the combustion engine could mean the loss of as many as 600,000 jobs once these engines are no longer needed. The battery constitutes fully one-third of the value of an electric auto.

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European manufacture of batteries is a goal close to the heart of Mr. Altmaier. He has convened a meeting of automakers, suppliers, chemical and energy companies for mid-November and hopes to announce consortium plans before the end of the year.

It will be a private sector consortium with no direct state participation, but there will be state aid. EU funds for research and development will also be available. In addition, structural funds for newer EU members like Poland could also be used to develop battery production in those countries.

Possible contenders

Which companies could participate in the consortium remains unclear. Two European startups are vying to launch large-scale production: German startup TerraE and Sweden’s Northvolt. Car-parts maker Continental, VW, BMW and Mercedes-maker Daimler have especially shown interest in a new battery type, which is also made of lithium-ion but in solid state instead of liquid.

In February, German engineering giant Siemens joined hands with Saft, a battery unit of French oil company Total, Belgian chemicals firm Solvay and German machine-maker Manz to develop this new generation of batteries.

If any of the existing projects or Mr. Altmaier’s new initiative is successful, Germany could reclaim some lost glory. The lithium-ion battery was invented in the 1970s at the Technical University of Munich, but Sony commercialized the technology in the 1990s and Asian companies took up most of the production.

Till Hoppe, Klaus Stratmann, Markus Fasse and Kathrin Witsch contributed to this article. Darrell Delamaide adapted it into English for Handelsblatt Global. To contact the author: d.delamaide@extern.handelsblatt.com.

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