Later, it became the European battery center. Five factors contributed to the transformation of Germany

PART 01

aims to become the European battery center

Image source: dpa

construction permit has not yet been applied for, but Tesla CEO Elon Musk (Elon Musk) is already talking about its largest super battery factory in the world in the suburbs of Berlin. There, the battery capacity will reach 100 gigawatt hours (GWh), which can be assembled in up to 1.6 million electric vehicles each year.

But Musk is not satisfied with this, he is even envisaged to expand the production capacity to 250 GWh. Not only is Tesla fully committed to the field of electric mobility (including electric vehicles and batteries), the established auto giant Volkswagen also hopes to produce about 22 million electric vehicles in the next ten years. The battery is the most important and also the most expensive component in electric vehicles.

In today's world, there is no other region where the production capacity of lithium-ion batteries is growing as rapidly as in Europe. The aforementioned auto giants have started producing electric cars and batteries one after another. According to current forecasts, by 2030, the global share of European battery production will increase from about 6% to 16% to 25%.

There are already many factories for battery production in Europe: According to the analysis of Benchmark Mineral Intelligence, a British benchmark mining intelligence company, by 2029, European battery production capacity will exceed 300 GWh.

Although Germany has not paid attention to the field of electric vehicles for a long time, most of the current production plans are carried out in Germany. A study conducted by the Fraunhofer Institute for Systems and Innovation (Fraunhofer ISI) on behalf of the German Society of Machinery and Plant Engineering (VDMA) shows that by 2025, almost half of Europe’s battery production capacity of 300 to 400 GWh All of the factories will be located in Germany.

Just a few days ago, Chinese manufacturer Svolt announced that it would build a 24 GWh factory in Saarland. Volkswagen also plans to establish a lithium-ion battery plant in Salzgitter with its Swedish partner Northvolt. Opel, its parent company PSA, and French manufacturer Saft have announced that they will jointly produce batteries at the Kaiserslautern plant.

PART 02

Five major contributing factors:

Source: Reuters

Germany came from behind and became the center of European battery production. This is definitely an amazing change, and there are five contributing factors:

1. Adjacent to the car manufacturer

, the importance of electric vehicles to German car companies is increasing. Especially for Volkswagen, the Wolfsburg-based company hopes to bring nearly 70 new electric vehicle models to the market within the next ten years. Starting in 2025, in Europe alone, the group will require more than 150 GWh of battery capacity per year.

Almost all German car companies cooperate with suppliers to produce batteries. Volkswagen is building a factory in Salzgitter with its Swedish partner Northvolt. On the other hand, Daimler and BMW buy batteries from suppliers and build their own batteries on this basis.

Currently, South Korea’s LG Chem and Chinese manufacturer CATL are the leaders in the automotive battery market, followed by Japan’s Panasonic. A large part of BMW's batteries come from the Erfurt plant in CATL, while Mercedes-Benz is a customer of the Chinese company Funeng Technology's Bitterde plant.

Battery production is one thing, and the integration of batteries into electric vehicles is another. It is easier and more efficient to manufacture batteries near car factories. For example, Tesla hopes to build a battery factory in an electric car factory near Berlin. This saves the high transportation costs of dangerous lithium-ion batteries and makes it easier to integrate the batteries into the vehicle.

The lithium-ion battery of Tesla Model S weighs significantly more than half a ton, depending on its performance. A managing partner of the automotive consulting company Berylls said: “For a long time, it has become a standard model for suppliers to manufacture large and heavy parts near automobile production facilities.” He took the retractable roof of a convertible as an example. These roofs Bulky, complicated and difficult to transport.

2. The largest potential sales market in Europe

is not only located in Germany, but also has the largest number of potential customers in the largest economy in Europe. Even in terms of the absolute number of the entire electric car market, Germany still lags behind. But this year, Germany has officially started to catch up with Norway, the leader in the electric car market.

In the first ten months of 2020, no other European country has registered more new electric vehicles and plug-in hybrid vehicles than Germany. This year, Germany has a total of 200,000 newly registered electric vehicles, which accounted for 27.2% of the European electric vehicle market.

This may also be due to generous government funding. The federal government recently announced that it will extend the subsidy policy for the purchase of electric vehicles until the end of 2025. The current subsidy issued by the federal government has reached 9,000 euros (shared by the government and manufacturers). Each federal state has also implemented its own funding measures. For example, in order to build local charging stations, the subsidy may even be as high as 12,000 euros (in the state of Bavaria).

3. State funding

Germany also supports battery manufacturers from multiple levels. Federal Minister of Economic Affairs Peter Altmaier announced that attracting manufacturers to establish their own battery production bases in Germany and other European countries is an important goal. He is ready to provide a total of more than 1 billion euros in financial support for battery manufacturers.

According to Altmaier, Tesla can rely on “substantial financial support” provided by Germany when establishing a production base. The federal and state governments are very aware of the intensity of competition. LG Chem and SK Innovation have established European production bases in countries with low labor costs such as Poland, Romania and Hungary. Honeycomb Energy has visited 30 regions in Europe in advance, but finally decided to land the factory in Saarland.

Saarland’s willingness to provide sufficient land and attach great importance to project planning is likely to be the decisive factor. In addition, Honeycomb Energy also receives financial assistance from state and federal funds and the European Union, which is 10% of the total investment of 2 billion euros.

4. Many expenses have nothing to do with the location of the production base

Why can Germany, which has extremely high labor costs, claim its ideal base for battery production? The answer is simple: According to calculations by the Fraunhofer Institute for Systems and Innovation, labor costs only account for 5% to 10% of the total cost of battery production. Most of the cost of

is still incurred during the development process. Therefore, if the production technology is optimized and the battery output is increased, the share of labor costs in the total cost will further decline in the next few years. For manufacturers, what is more important is the cost of raw materials such as lithium or nickel. According to the Fraunhofer Institute for Systems and Innovation, 70% to 80% of the total cost is due to “location-independent” factors, such as the cost of raw materials and equipment.

5. The technical workers

Institute concluded that each GWh of battery capacity will create 40 jobs in battery production, and 200 “upstream” jobs in R&D, mechanical engineering and facility construction. post.

extrapolates from the estimated production capacity of at least 300 GWh in Europe in 2029, which is equivalent to 12,000 direct jobs and 60,000 upstream jobs. By 2033, due to further employment effects, the Institute even predicts that the number of jobs related to European battery production will reach 155,000.

Even though Germany is a latecomer in the field of battery production that has been "sleeping for a long time", Germany has been a leader in battery research and development for many years. For ten years, the Federal Ministry of Research has been providing targeted support to Munich, Dresden, Stuttgart/Ulm and Aachen/Jülich/Münster. German researchers also enjoy a good international reputation in battery technology.

's new route towards the battery center is definitely a new hope for people working in the automotive industry. According to research data, there are about 600,000 jobs in Germany that are related to traditional engine technology. With the transformation of the automotive industry to electrification, they are already under pressure.

Although automakers are investing billions of euros in employee training and factory renovation, all studies have unanimously predicted that many jobs will be created in the battery production process in the future, and these employees happen to be used by battery manufacturers. It is a win-win situation for businessmen and employees.

PART 03

Energy is another big problem

Image source: wiwo

But there is another big problem, where should the energy for the many giant factories in Germany come from. According to the Essen energy group Eon, which supplies energy for Tesla’s Grünheide super factory, Tesla’s announced car manufacturing plant near Berlin alone has planned energy requirements of 100 megawatts. This roughly corresponds to the electricity demand of a large city like Chemnitz in western Saxony. However, with the battery production plan now announced, energy demand may increase many times.

Musk hopes to provide 100% solar energy for his factory in Nevada, USA, and most of the energy for his first factory in Germany will also come from renewable energy. Battery manufacturers such as CATL and Honeycomb Energy have also issued similar announcements.

Last year, the proportion of renewable energy in Germany's electricity consumption was 46%. Although due to the new crown virus crisis, wind, solar and biomass energy will meet 55% of Germany's electricity demand in the first half of 2020, the other half of the demand still comes from coal, nuclear energy and natural gas.

Although the proportion of renewable energy will increase to 60% by 2030, even if this goal is achieved, battery manufacturers still need to rely on green energy from abroad to meet their huge demand for energy, perhaps hydrogen from Russia Can is a good choice.

In any case, Germany has found a new position of its own, and both battery factories and battery testing centers are in full swing. Germany will continue to defend its reputation as the "automobile kingdom" as the automotive industry transitions from internal combustion engines to electric drives.

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