Mobility Portal, Spain
Date: June 14, 2024
Inés Platini
By Inés Platini
Germany flag

Too late?: Electric vehicle battery plants halt production in Germany

Due to the decline in electric vehicle sales in Germany, several companies, including Mercedes Benz, have decided to delay their electrification targets, which now appears to be impacting battery factories. However, "there is no need for alarm." Below, all the details.
Too late?: Electric vehicle battery plants halt production in Germany

The company Automotive Cells Company (ACC), a joint venture of Stellantis, Mercedes-Benz, and TotalEnergies, had planned to have three gigafactories for electric vehicle batteries by the year 2026 in Europe.

However, the reality will be different, as the collaborative enterprise has recently announced that it will halt the construction of its plant in Germany.

This decision has been made pending a review of the business model, in light of the slowdown in sales in this segment of the automotive field and the high costs currently faced by the industry.

Gustavo Franco, Managing Partner at EV Insights.

“They do not have it easy as they are arriving late and at a delicate moment,” says Gustavo Franco, Managing Partner at EV Insights, to Mobility Portal Europe.

This is partly because technological advances in the electric mobility sector are happening at a faster pace than in the case of internal combustion vehicles.

Previously, fundings could be made with a ten-year horizon. Now, this is no longer the case.

“Currently, investments have shorter timeframes because technological advances can render a factory obsolete even before it begins operations or delivers products,” the expert indicates.

This is related to the innovation being carried out by China in areas such as phosphate and lithium, among others.

Recently, the Chinese startup Greater Bay Technology announced an advance in the thermal management of car batteries, enabling them to operate efficiently at both high and low temperatures.

Thanks to this, they can offer a range of up to 1,000 kilometres.

In this context, Franco maintains that ACC aims to be a supplier for all manufacturers.

“But if the technology they are betting on starts to become outdated compared to the new batteries being developed and delivered in China, everything they are planning here will be a useless investment,” he emphasises.

ACC’s plant in Kaiserslautern, Germany, has received 437 million euros in subsidies from the German federal government and the state of Saarland.

However, the joint venture has requested additional subsidies before starting operations at the factory.

The factory was expected to begin operations in 2025, with a capacity of 40 gigawatt-hours (GWh), sufficient to meet the demand of more than 600,000 cars in 2030, and generate employment for 2,000 people.

Nevertheless, this timeline is now in suspense.

None of these investments and forecasts are based on current market calculations, but are all oriented towards what is projected to be in ten years,” details the EV Insights representative.

And he adds: “In terms of demand, it works, but technologically it does not, and that is ACC’s problem.”

Not only that.

Despite the companies coming together to form this consortium with the purpose of manufacturing cells, they are also producing independently.

For example, in addition to being a shareholder in ACC, Stellantis has signed an agreement with the Chinese company CATL to build an LFP battery production plant in Europe.

In this regard, the specialist indicates that large automotive groups are investing in various projects “to determine what will be most successful.”

Consequently, he assures that it is common to experience a phase of consolidation in which one technology or project gains momentum while another loses strength.

But Stellantis and Mercedes-Benz are not the only ones

In April, Volkswagen warned that it would postpone the start of operations of its battery factories in Europe due to the decline in electric vehicle sales.

It is worth mentioning that in the current year, new registrations of 100 per cent electric vehicles are 16 per cent behind last year’s level in Germany, according to the German Association of the Automotive Industry (VDA).

In parallel, in the first five months of 2024, approximately 17 per cent more plug-in hybrid cars were registered compared to the same period last year.

Therefore, several manufacturers are opting to promote the commercialisation of these types of automobiles and maintain their internal combustion engines.

Meanwhile, Solarwatt announced the closure of its battery factory in the country, at its Dresden facilities, by the end of this year, and confirmed that it will move all cell and solar panel production to China.

According to the company, the decision was made for economic reasons.

Nevertheless, Gustavo Franco assures that ACC’s project “could bounce back at some point,” so he does not perceive a risk of it collapsing, but he does consider it possible that it will be reconsidered or resized.

“I do not know of any project of these characteristics in Europe that, in an approval, design, and financing phase, has been abandoned,” he highlights.

In this regard, he affirms: “Therefore, there is no need to panic; these announcements are common and are part of the normal phases in production processes.”

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