HAMBURG, Germany – Two Chinese electric vehicle battery makers will kick off this year at a $ 3.2 billion production facility in Germany to serve the growing European market for new energy cars, following in the footsteps of industry leader Contemporary Amperex Technology Ltd.
SVOLT Energy Technologies, a spin-off of Chinese automaker Great Wall Motor, plans to build two plants, at a combined cost of around 2 billion euros ($ 2.42 billion), in the western state of Saarland by the end of the year.
Farasis Energy (Ganzhou), which sold a 3% stake last year to auto group Daimler in a 900 million yuan ($ 138.8 million) deal, aims to begin construction of a 600 million euro plant in the eastern city of Bitterfeld at the end. March.
Shenzhen-listed CATL hopes to open a 1.8 billion euro production complex in the eastern state capital Erfurt later this year. Daimler and BMW are both committed to buying batteries from factories.
Kai-Uwe Wollenhaupt, president of SVOLT Europe and vice president of its parent company, said the company will start supplying unnamed customers in Germany from its Chinese factories next year before phasing in local production. Great Wall has previously spoken of opening a factory in Europe, but Wollenhaupt would not confirm whether the carmaker will become a local client.
“Anything is possible in our sector, but we want to emphasize that we are not talking about our customers,” he told Nikkei Asia in a recent interview. “We have to get into Germany to position ourselves in the market … because local-to-local production is not just a slogan for European carmakers.”
Indeed, he sees local production as an important green credential for EV battery manufacturers given the emissions involved in shipping batteries from China and much of the renewable power in Germany. While wages are high in Germany, he says automatic production is 90%.
“Before we settled in Saarland, we searched more than 30 locations, including in Eastern Europe, and we found that only in Germany could we quickly recruit sufficient talent and power sources in a way that our clients’ climate targets could be met,” said Wollenhaupt. .
Thanks to expanded purchase subsidies for electric cars and expectations of tightening EU emission standards, EV sales in Germany surged last year. Electric vehicles represented 13.5% of passenger car sales in the country last year, up from just 3% the previous year, according to industrial site CleanTechnica. In December, the share of electricity reached 26.6%.
“German battery demand will be much higher than expected two years ago,” said Stefan Bratzel, director of the Center for Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany. “Each carmaker has to rely on a number of suppliers to be on the safe side.”
Volkswagen Chief Executive Herbert Diess projected in December that the EU plans to achieve carbon neutrality by 2050, which is expected to be completed this year, could mean the company itself will need to supply up to 40 major battery plants.
SVOLT aims to produce 24 gigawatt-hours worth of car batteries a year in Germany, a quarter of its global target, while Farasis aims to release 6 GWh from Bitterfeld by next year towards a full 10 GWh output. CATL said its German plant would be able to produce 14 GWh of batteries.
A number of other companies are also setting up car battery factories in Germany, including Tesla, while South Korea’s LG Chem and SK Innovation have set up shop in Eastern Europe.
Citing forecasts that increasing European EV sales will require 500 GWh of batteries by 2030, Wollenhaupt said, “The market will definitely need some players to meet this demand.”
While many industry observers expect every carmaker to use multiple suppliers to reduce the risk of production disruptions and other problems, Martin Winter, professor of electrochemical energy technology and materials science at Muenster University and Forschungszentrum Juelich research center, said battery makers will be in tough competition. for relative gain.
“The race will discuss about the rapid adoption of new technology, rapid improvement of processes and reduction of costs,” he said.
SVOLT aims to be the first auto battery maker to supply cobalt-free units later this year, under a deal with Great Wall Motor. Battery makers have been looking for ways to limit cobalt’s use, given its cost and mining of the environmentally damaging element in unstable African countries. Chinese mining companies dominate production.
SVOLT plans to start producing new batteries in China in June and then in Germany by the end of 2023.
“The cobalt-free breakthrough reflects that half of our staff are working in R&D and we are very innovative and agile,” said Wollenhaupt.
Some, however, question whether SVOLT can catch up to CATL.
Kai-Christian Moeller, who researches battery technology at the Fraunhofer Institute for Chemical Technology in Munich, noted that CATL currently has four times the production capacity of SVOLT and three Chinese plants compared to its younger rivals.
“You not only need investment capital to produce batteries in Germany, but also knowledge,” he said. “There will be tough competition for some experienced specialists, which means you have to bring in the right lots of people from Asia to start production.
“Although CATL could easily bring several hundred Chinese engineers to Erfurt, SVOLT may find it difficult to increase production in Germany and in China at the same time,” he added.