Germany intends to spend €1 billion to support a consortium looking to produce electric battery cells. Meant to reduce the dependence of carmakers on Asian suppliers and protect jobs, the measure may come too late.
Germany's €1-billion ($1.2-billion) push to shape industrial policy around electric vehicle (EV) battery production is a break with Berlin's "hands-off" approach to business decisions and fits into European Union efforts to forge battery alliances to counter the dominance of Chinese, Japanese and Korean firms.
According to data collected by Bloomberg News, some 80 percent of the world's existing battery production is in Asia, with China accounting for 69 percent of capacity, the United States 15 percent and the EU less than 4 percent. China's de facto monopoly in batteries threatens to undermine the ability of Germany's carmakers to compete with their Chinese rivals as the automotive industry shifts away from the combustion engine.
But the German government's push could be too late because global market leaders are not only ramping up production at home, but also in Europe. Soon they will be offering the full value chain of battery technology from cell production and pack assembly to battery management systems here, prompting analysts to warn of a likely glut that could hinder the establishment of large-scale battery cell production by European newcomers.
DW has compiled a few details of battery makers' plans to build cells and modules in Europe, and the difficulties in establishing an independent industry here.