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German Automakers Looking to Outside Sources to Meet Demand for EV Batteries

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【Summary】German automakers, including Volkswagen and BMW, are fearful that the country may not have sufficient production facilities to meet the demand for electric vehicle battery cells, as the country’s major automakers make plans electrify their model lineups.

Eric Walz    Jul 09, 2018 11:00 AM PT
German Automakers Looking to Outside Sources to Meet Demand for EV Batteries
author: Eric Walz   

MUNICH – German automakers, including Volkswagen and BMW, are fearful that the country may not have sufficient production facilities to meet the demand for electric vehicle battery cells, as the country's major automakers make plans electrify their model lineups. Both automakers are looking to foreign battery producers to meet demand.

Reuters reported that Chinese Prime Minister Li Keqiang is expected to take part in a signing ceremony at a summit in Berlin on Monday for Contemporary Amperex Technology Ltd (CATL) to build a battery plant in the eastern state of Thuringia.

BMW has awarded a contract worth just over 1 billion euros ($1.2 billion) for China-based CATL to make cells for electric cars, while Volkswagen has selected three suppliers–CATL, South Korea's Samsung and LG Chem to supply $25 billion worth of batteries.

Tesla founder Elon Musk has also talked about building a ‘Gigafactory' to build batteries near the Franco-German border, in the vicinity of its Grohmann Engineering division, the same company that built a production line for Tesla's Nevada battery factory.

"If we want to have a German battery cell industry, then this is a warning shot," said auto industry expert Joern Neuhausen of PwC consulting arm Strategy&.

Volkswagen, along with its luxury division Audi, is pushing to introduce electric models in an effort to distance itself from the ‘dieselgate' scandal of 2015, which severely damaged its reputation. The company plead guilty to tampering with engine management software to mask excessive emissions from its diesel engines.

Since pleading guilty, Volkswagen called upon the German and European auto industry, to team up on EV battery production. Industry experts expect the mobility revolution to boost Europe's battery market to 250 billion euros by 2025, according to Reuters.

Robert Bosch, a major German auto parts supplier, has opted out of making lithium-ion battery cells due to excessive costs. The company said it would take an investment of 20 billion euros to supply just one fifth of the European EV market by 2030.

In addition, current lithium-ion battery technology may not robust enough to provide longer range to EVs.

"There is absolutely no point in chasing after today's technology," said Peter Cammerer, a member of the works council at BMW.

Cammerer urged the German auto industry to prepare for the "post-lithium era" by focusing its joint efforts on promising sodium or magnesium-ion battery technologies. Battery-grade sodium salts are more abundant than lithium, while magnesium has the potential to be used in solid-state batteries — potentially more efficient. "The right time is now," said Cammerer.

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