German Giants Team Up To Boost European Electric Car Battery Production

Stuttgart battery manufacturer Varta has joined with the Fraunhofer Institute in a research deal aimed at boosting battery production in Germany as the automobile market shifts away from combusion engines.

The arrangement is backed by funding from the German state of Baden-Württemberg and is the latest European effort to target mass production of lithium-ion battery cells for electric cars.

The German government has set aside 1 bilion euros (£890m) to support companies within the country looking to enter battery production for electric vehicles.

The market for such large-format batteries is currently dominated by Asian companies including China’s CATL, South Korea’s SK Innovation and Japan’s Panasonic.

European production

“We are working hard to establish cell production for large-format lithium-ion cells here in the country,” Minister of Economic Affairs Nicole Hoffmeister-Kraut told journalists on Monday, according to local media reports. “We can not allow our companies to become ever more dependent on Asian manufacturers. ”

Thus far no German carmakers or suppliers have been willing to invest the billions of pounds that would be necessary to ramp up large-scale battery production in the country.

With the new research partnership, Varta and the Fraunhofer Institute are aiming to find ways of reducing the current scrap rate of 10 percent by building a more digitised production line, said Fraunhofer’s Thomas Bauernhansl.

Varta is a world leader in hearing aid batteries and also produces large batteries for the storage of solar energy.

It is the only company in Germany with experience in the mass production of battery cells, reducing the risks of its entry into the market.

The company said the agreement is intended to lay the foundation for extending lithium-ion battery production.

“Our business model is not to conduct research projects,” Varta chief executive Herbert Schein said at a press event in Stuttgart. “If we do research projects, we want to invest and produce afterwards.”

German consortia

But production would be likely to require other major industrial partners.  BASF and Ford’s German subsidiary, Ford-Werke, are rumoured to be in talks with German Economy Minister Peter Altmaier about building local battery cell alliances, according to Reuters.

Altmaier has said he has been in talks with interested parties for several consortia on battery cell production and that he expects concrete investment decisions by the end of the first quarter of next year.

In April a company called Northvolt, founded by two former Tesla executives, began construction in Sweden of the first phase of a planned large-scale battery factory that would be similar in scale to Tesla’s Gigafactory 1 in Nevada.

Last year the British government awarded £62 million in funding to low-emissions automotive projects, including the development of electric vehicle batteries to be be produced in the UK.