France & Germany to Support a EV Battery Consortium With PSA Group and Battery Maker Saft
German and French automakers are exploring ways to lessen their reliance on Asian suppliers for electric vehicle batteries and are supporting plans for a new cross-border battery consortium. The two countries have asked the European Commission to approve state subsidies for a battery cell consortium, including carmaker PSA Group with its German subsidiary Opel and French battery maker Saft, a German official said on Monday.
Germany and France have earmarked 1.7 billion euros ($1.9 billion) to support company alliances to help reduce European carmakers' dependence on Asian suppliers and protect jobs at risk from the shift away from producing combustion engines.
As reported by Reuters, the economy ministries of both countries sent a letter of intent to the European Union's executive body asking it to give a provisional go-ahead, a German economy ministry spokeswoman said, without giving a sum for the planned state funding.
"We're now waiting for Brussels to give us the green light," the spokeswoman said, confirming an earlier report by FAZ newspaper.
Currently, no German automaker or supplier produces battery cells for electric vehicles.
Electric car battery sales are projected to hit $60 billion by 2030 so there is a growing need for a reliable source of EV batteries by European automakers to support the shift from internal combustion engine vehicles to battery-powered ones.
Two of the major suppliers right now are China's Contemporary Amperex Technology Co. Limited (CATL) and Build Your Dreams (BYD). Both companies have ramped up production significantly with help from generous state subsidies for Chinese electric carmakers.
Other leading battery producers include players such as Panasonic, who supplies batteries to electric automaker Tesla and Toyota, LG Chem and Samsung SDI. LG Chem is already supplying some German carmakers with EV batteries made in Poland while Samsung SDI is planning a factory in Hungary.
In Nov 2018, BMW signed a long-term contract with CATL to supply batteries for the upcoming electric iNEXT.
CATL is building a 240 million euro ($270 million) lithium-ion battery factory near Erfurt, eastern Germany, slated to begin production in 2021 with an initial capacity of 14 gigawatt hours per year. The Erfurt plant is backed by an initial battery order from BMW worth 4 billion euros, including 1.5 billion euros' worth to be produced in Erfurt.
Matthias Zentgraf, CATL's regional president for Europe projected that Germany will see demand of at least 100 GWh in 2025. For comparison, Tesla's Gigafactory in Nevada was projected to reach capacity of 35 GWh in 2018.
German Economy Minister Peter Altmaier will meet French counterpart Bruno Le Maire in Paris on Thursday to discuss the matter, aiming to make progress with forging further battery alliances.
The FAZ report said that the PSA/Saft alliance was planning to convert an Opel factory in the western city of Kaiserslautern close to the French border into a battery cell production site.
Among the more than 30 companies that applied for state funding at the German Economy Ministry are carmakers Volkswagen and BMW, along with German battery maker Varta and Swedish battery manufacturing startup Northvolt.
Saft, a 100-year old French company owned by energy company Total, produces a range of batteries for industrial applications.
Earlier this month, Saft struck a deal to expand its own presence in China for the fast growing market for batteries, energy storage and new energy vehicles (NEVs), which include electric and plug-in hybrids. Saft signed an agreement with Tianneng Energy Technology to create a new joint venture.
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