Baden-Baden – December 7th, 2020 –
Almost without exception, lithium-ion battery cells come from Asia – a major disadvantage for European manufacturers in e-mobility. This equation has burned itself into the minds of automakers and suppliers as a stereotype. But soon it no longer applies. In Europe, production capacities for battery cells amounting to 500 gigawatt hours will be created by 2030. That is half more than the 345 gigawatt hours that China, currently the world’s largest producer, will produce in 2020. Europe will overshadow the USA, which is expecting production capacity to stagnate.
The race seemed lost. When Bosch announced more than two years ago that it would not invest in battery cell production, many believed this race was lost for Europe. The tide has now turned through courageous investments in battery cell production by corporations and consortia such as Volkswagen, BASF and Northvolt, politically flanked by subsidies of billions from the EU. December 2019 can be considered the turning point. A year ago the EU Commission launched the European Battery Alliance. A billion-dollar deal: the seven member states Belgium, Germany, Finland, France, Italy, Poland and Sweden are making 3.2 billion euros available with the aim of generating a further 5 billion euros in private investments.
Europe entered the battery race from last place on the grid and will overtake the USA in cold weather. The front runner China is in sight, only with the advantage of an earlier start – the capacity already installed. By 2030, consortia in Europe – just like in China – will set up half a terawatt hour (500 gigawatt hours) of new production capacity. The most modern and powerful battery ecosystem in the world is emerging in Europe. In 2030, the global production capacity will be 1.3 terawatt hours. This means that around a quarter of global vehicle production can be battery-electric. And Europe will have over 1/3 of it.
The political framework for this mammoth project is formed by the EU state aid regulations and in particular the agreements on important projects of common European interest (IPCEI). The project participants and their partners will focus their work on four areas:
(1) Raw materials and modern materials: As part of the project, sustainable innovative processes for the extraction, enrichment, refining and purification of ores are to be developed in order to obtain highly pure raw materials. With regard to modern materials (such as cathodes, anodes and electrolytes) the improvement of existing and the development of new materials for innovative battery cells is aimed at.
(2) Cells and modules: The project is intended to enable the development of innovative battery cells and modules that meet the safety and performance requirements of the automotive industry and other areas of application (e.g. stationary energy storage devices and power tools).
(3) Battery systems: In addition, innovative battery systems including battery management systems (software and algorithms) and innovative test methods are to be developed.
(4) Conversion, recycling and refining: As part of the project, safe and innovative processes for the collection, dismantling, conversion, reuse and refining of the recycling material are to be developed.
Germany becomes the epicenter for batteries in Europe. More than half of the investments and production capacity planned to date are attributable to locations in Germany. The pivotal points of the new battery ecosystem include Parsdorf, Kaiserslautern, Tübingen, Arnstadt, Bitterfeld-Wolfen, Salzgitter, Grünheide, Überherrn and Erfurt. More than 280 gigawatt hours could be developed and produced here.
The prices have already fallen by a factor of 10. Ten years ago, a kWh Li-ion battery cost around 1,000 euros; today, 100 euros have already been reached, and the target is 60 euros in the medium term. Even at this price, that means a business volume of 15 billion euros per year in Germany alone for batteries only, and an investment volume of around 20 billion euros, assuming that around 50% pure electric vehicles will be produced in 2030. Even if the fuel cell were to achieve a significant share, the big picture does not change significantly. Because it also needs a battery, just smaller. And the batteries of the plug-in hybrids are not yet included in these figures, and nobody should seriously believe that we will still be driving purely with internal combustion engines in 2030.
The opportunities for the entire value chain are huge, including for medium-sized companies. The task has to be mastered too, however. Hundreds of companies need an estimated 10,000 new R&D employees, as well as several thousand other specialists in business development, sales, project management, purchasing and logistics. Many of these jobs are created outside of metropolitan areas – in Brandenburg, Thuringia, Saarland, Lower Saxony. In such a scenario, the “time-to-market”, the speed of market development for suppliers and service providers, is a decisive indicator for success. You not only need short-term and flexible employees who work on the market and manage projects, but at the same time you have to transfer know-how at high speed and create teams “out of the ground”. This is a classic domain of interim management.
Interim managers can make valuable contributions in building this battery ecosystem:
- Make the coming value chain transparent for companies
- Recognize the opportunities for companies and develop them with your network
- bring in the necessary skills for new topics and technologies
- Achieve sustainable value enhancement through further development of the company, for example through initiatives in the direction of new, complementary business models
- Bring together complementary companies that complement each other sensibly in terms of their unique selling points, that is, help to build a future business ecosystem
The subject of business ecosystems is also dealt with in my book „Unternehmer Deines Business Ecosystems“, which was published in German language on November 12th, 2020. It is available in hardcover, paperback and as an e-book.