POWER PACK

BMW is investing billions into China’s new battery-cell factory in Germany

Obsession
Energy Shocks
Obsession
Energy Shocks

While Washington and Beijing trade barbs with each other over billions worth of import tariffs, German chancellor Angela Merkel welcomed the Chinese premier Li Keqiang and his delegation to Berlin on Monday (July 9).

China is Germany’s biggest trading partner outside the European Union, and both countries signed a raft of business deals. SAP made a cooperation agreement with Suning Holdings, while chemicals firm BASF inked an agreement to set up a new site in Guangdong, China.

One of the most note-worthy announcements was the official go-ahead for China’s biggest battery maker, Contemporary Amperex Technology Ltd (CATL), to build a huge battery-cell factory in the eastern German state of Thuringia. The state’s economy minister, Wolfgang Tiefensee told the German Press Agency that the Chinese factory would help Thuringia become “one of the most important European locations for battery technology.”

News of the battery factory has been swirling around for weeks, and BMW confirmed today that it had committed to sourcing €4 billion ($4.7 billion) worth of battery cells from CATL once the factory in Erfurt is up and running in 2021.

BMW, already a customer of CATL in China, is also putting up some of the investment money to develop the Erfurt factory. Daimler has also recently awarded CATL, the world’s biggest battery supplier, a multibillion euro contract.

German automotive supplier Bosch announced earlier this year that would not invest in battery-cell technology because it was too expensive and risky. This stoked concerns that Asian companies were going to dominate battery-cell production, which could put German automakers in an insecure position moving into the electric-vehicle era.

However, Ferdinand Dudenhöffer, professor of automotive economics at the Center for Automotive Research in Duisburg, said that the CATL battery-cell plant is a good thing for Germany and would help keep German carmakers competitive.

“It’s good that it [the factory] doesn’t go to eastern Europe instead,” Dudenhöffer said. “CATL is a very open company, whether it is German or not does not matter.”

“It is important that Germany works closely with a big international manufacturer, because the Germans can’t do it, they don’t want to… and they are less willing to invest in this new field.”

home our picks popular latest obsessions search