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The EU’s charge to create its own Tesla Gigafactory

e-auto batteries
Time for a charge. Source: Mauritius Images

Last October, German heavyweight corporations BASF, Bosch, Daimler and VW all sent top managers to an EU Commission hearing to discuss the possibility of producing auto batteries in Europe. In the coming electric car boom, the continent’s industry and governments would rather not rely on Asia and the US for their defining components.

Auto manufacturers and suppliers so far have been loath to enter the battery production market, discouraged by Asian innovation and the uncertainty of electric car sales. But the hesitance annoys the EU Commission and the German government, which worry about the companies’ competitiveness in a most important industry.

Observers weren’t particularly optimistic about the summit on domestically-produced batteries, but the skepticism was rash. A month before the working groups are set to present their findings, there’s been promising movement.

An EU member state and investors are considering funding a major car battery plant.

“We are progressing very quickly by European standards,” EU Commissioner Maroš Šefčovič told Handelsblatt. The industry will present an action plan by the end of February that includes more than 40 suggestions to realize the initiative. The ideas include a clearinghouse for resources such as lithium, cobalt and nickel. Rules for recycling used e-auto batteries are also being discussed.

It also addresses production of battery cells, the weakest point in the European supply chain. An EU member state and investors are considering funding a major car battery plant, according to representatives from the auto and chemicals industries. A decision is due soon, they added, and announcements can be expected in the coming months.

Currently, nearly 90 percent of the memory cells used to create batteries are imported from China, Japan and South Korea. In Europe, the industry is still in its infancy. VW, which has launched a massive shift to produce electric cars, is soliciting potential partners in China, Europe and North America to jointly build batteries. German startup TerraE is planning to launch production in 2019 and have two plants with a total capacity of 34 gigawatts by 2028.

In the US, Tesla and Panasonic are investing $5 billion together in a 35-gigawatt Gigafactory that aims to be the world’s biggest producer of lithium ion batteries. Europe would have to make a similar investment to compete, something that is being discussed within the battery alliance.

German automakers have been generally done with the topic since Daimler closed its battery cell production facility in 2014 after failing to match the prices and quality of competitors such as Samsung, Panasonic and LG Chem. BMW is also uninterested in producing its own batteries: “We buy from the best suppliers, and they are currently in Asia,” purchasing head Markus Duesmann told Handelsblatt.

Car-parts makers Bosch and Continental are setting their sights on solid-state battery technology.

The carmakers would welcome batteries made by Bosch or Continental, but those suppliers are hesitant. CEO Volkmar Denner said Bosch will make a decision on batteries this year, though he has told Handelsblatt that entrance into the current technology would not make sense. Continental boss Elmar Degenhart said his company cannot compete with the price and technology of lithium ion batteries provided by Samsung and LG. But both German car-parts makers are setting their sights on solid-state battery technology that could be ready for production after 2025.

Mr. Šefčovič finds the wait-and-see attitude dangerous. “If we just wait for the next generation of batteries, we risk losing the whole market to the competition here in Europe,” he said. Without gaining production experience, the European industry risks losing even more ground. To encourage local manufacturing, the EU Commission is ready to invest more than the €200 million in development funds already available. Building battery cell factories could be declared a European common interest and thereby be freed from subsidy restrictions.

“With this combination of political, regulatory and financial approaches, I hope we can kick start the necessary dynamic for this sector,” Mr. Šefčovič said.

Aside from the alliance, Swedish startup Northvolt, led by former Tesla executive Peter Carlsson, aims to produce batteries with 32 gigawatt hour capacity by 2023. The European Investment Bank will decide in the next weeks whether to grant it a credit in the mid-two-digit million range. The EU Commission will reveal its contribution to the domestic battery market in May.

Markus Fasse writes about the aviation and automobile industry. Till Hoppe reports on politics for Handelsblatt, with a focus on defense, domestic policy and cyber issues. To contact the authors:,

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