Germany to support three battery cell alliances - economy minister (updated)
18/06/2019 17:43
* More than 30 companies have applied for state funds
* Economy Minister says selection process still ongoing
* Hopes to get green light from Brussels by year-end
* Push aimed at reducing dependence on Asian suppliers
(Adds McKinsey on expected demand, background)
By Michael Nienaber
BERLIN, June 18 (Reuters) - Germany will award to three
consortiums 1 billion euros ($1.12 billion) in funding it
earmarked last year to support domestic battery cell production,
Economy Minister Peter Altmaier told Reuters, part of a bid to
cut carmakers' reliance on Asian supply.
Securing a regional supply chain for electric vehicles (EVs)
would help Germany achieve European Union goals to lower carbon
emissions and cut fossil fuel consumption.
It would also strengthen the ability of the continent's
automakers and battery makers to compete with Asian rivals CATL
300750.SZ , LG Chem 051910.KS and Samsung 006400.KS .
"We've now reached a point where we can say that there is
likely to be not only one battery cell consortium, but probably
three," Altmaier said in a Reuters interview.
The Economy Ministry will submit all necessary state aid
documents to the European Commission once it has completed its
selection process, Altmaier said.
He declined to comment on which companies have the best
chances of getting the earmarked funds.
Carmakers Volkswagen VOWG_p.DE and BMW BMWG.DE , German
battery maker Varta VAR1.DE and Swedish battery manufacturing
startup Northvolt are among the more than 30 companies that
applied for state funding from the German Economy Ministry.
France and Germany have already asked the European
Commission to approve joint state subsidies for a cross-border
battery cell consortium including carmaker PSA PEUP.PA , its
German subsidiary Opel and French battery maker Saft TOTF.PA .
urn:newsml:reuters.com:*:nL5N22E6AM
The European Union allows state aid under certain conditions
under its rules for Important Projects of Common European
Interest (IPCEI).
Europe's Energy Commissioners Maros Sefcovic and Competition
Commissioner Margrethe Vestager have signalled support for the
battery cell initiative.
GROWING INTEREST
"We hope that by the end of the year we will have clarity
from Brussels," Altmaier said, adding that the industry's
growing interest in the scheme showed Berlin was right to push
ahead with its new industrial policy plan.
Northvolt has made two applications for German funding, one
to set up its second gigafactory in Germany and another to fund
its battery research project with customer Volkswagen.
Northvolt and Volkswagen also said this year that they are
planning to set up a joint venture to build a battery plant in
Salzgitter, Germany, but did not specify how they would fund the
venture. urn:newsml:reuters.com:*:nL8N23J3DK
German carmakers have hesitated for years to build up their
own production capabilities for EV battery cells. This has
increased Asian suppliers' pricing power over European clients.
Stricter European emission rules and shifting consumer
tastes have changed automakers' calculations, meaning demand for
e-cars and batteries is expected to soar in the coming years.
The projected battery demand from EVs produced in Europe is
more than five times the volume of currently confirmed projects
in the region, business consultancy McKinsey said in a research
note.
Battery demand from EVs produced in Europe will reach a
total of 1,200 gigawatt hours per year by 2040, it said. This
would be enough for 80 gigafactories with an average capacity of
15 gigawatt-hours per year, it added.
The German government is also funding a research facility to
offer firms in Germany know-how to develop battery cells for
electric cars. urn:newsml:reuters.com:*:nL8N1ZN56S
($1 = 0.8933 euros)
(Reporting by Michael Nienaber
Additional reporting by Esha Vaish in Stockholm
Editingy by Joseph Nasr)
((michael.nienaber@thomsonreuters.com; +49 30 2888 5085;
Reuters Messaging: michael.nienaber.reuters.com@reuters.net
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