Germany Amps Up Domestic Battery Production With Massive State Subsidies

The German government is investing more than EUR 1.5 billion in battery cell research and production - a key element in the country's planned transition to clean energy and mobility.

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Germany Trade & Invest

Jun 30, 2020, 10:31 ET

BERLIN, June 30, 2020 /PRNewswire/ -- Major players in the industry are lining up to get involved in the initiative, and on Tuesday, June 30, German Minister of Economic Affairs and Energy Peter Altmaier officially awarded the government's first grant – worth EUR 300 million – to battery company Varta.

"The establishment of innovative and sustainable battery cell production is a high priority for us in Germany," said Altmaier. "It is necessary to remain competitive during our energy and transportation transition, to create new jobs and to ensure prosperity. Today we have taken a large step toward large-scale domestic production of automotive and industrial batteries."

The initiative is part of a European Union IPCEI, Important Project of Common European Interest. Four other companies with battery-cell projects in Germany will also be receiving grants: BASF, BMW Group, Opel and Umicore.

The European Battery Alliance believes that the value of the market for European-made batteries could reach as much as EUR 250 billion by the mid-2020s. And lithium-ion batteries account for approximately 40 percent of the value creation of electric vehicles, says the German Economics Ministry.

The aim is for the projects underwritten by the government to begin making batteries in 2022 and enter industrial-scale production by the mid-2020s at the latest.

Producing batteries domestically rather than abroad is already a trend, explains Germany Trade & Invest (GTAI) automotive expert Stefan Di Bitonto.

"It's obvious right now that battery manufacturers are moving closer to their customer base," Di Bitonto says. "Germany is the heart of the European automotive industry, and we're seeing increased volume in investments in this area in various German regional states: most prominently CATL in Thuringia, Northvolt in Lower Saxony, Farasis in Saxony-Anhalt and most recently Tesla in Brandenburg. We believe that in future German automotive production will primarily get the batteries for its electric vehicles directly from Germany."

Germany aims to have 7 to 10 million EVs on the country's roads by 2030, and government-backed incentives of up to EUR 9000 are available to purchasers of new EVs and hybrids. That will open up business opportunities for German subsidiaries of foreign companies as well.

"By expanding to Germany, companies active in the value chain in this area can profit from this development and take part in a revolutionary change, influence things to come and position themselves advantageously for the mobility of the future," say Di Bitonto.

Germany Trade & Invest (GTAI) is the economic development agency of the Federal Republic of Germany. GTAI supports German companies setting up in foreign markets, promotes Germany as a business location and assists foreign companies setting up in Germany.

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Germany Trade & Invest (GTAI) is the Federal Republic of Germany's agency for promoting trade and investment to and from Germany.

SOURCE Germany Trade & Invest