Will the "Airbus of batteries" be able to encourage OEMs to get involved in the industry?

Airbus as the one stop shop reference...

The debate sparked by the Competition Commissioner rejecting the merger of Alstom and Siemens has had the merit of reviving an idea of the EU that has been somewhat forgotten since the Single Act more than 30 years ago: that creating the single market could also make it possible to conduct industrial and research policies that are equal to those designed and implemented elsewhere in the world.

This may mean that instead of considering that the short-term interest of consumers should be the only compass of European policies, there are cases where, for geostrategic reasons, it may be appropriate to protect themselves and hold industrial firms accountable for their responsibilities to the territories, employees and economies to which they belong.

This is the path that was taken under the impetus of the German Minister of Economy Peter Altmaier in the field of batteries and which led this week to the famous "Airbus of batteries" finally being launched with the blessing of Brussels and despite the reticence of many OEMs.
Indeed, we must put our case back in the sequence of decisions taken by the EU since the dieselgate: after the transition from the NEDC to the WLTP, which took place without manufacturers being able to play all the tricks they were asking for to manage the transition more easily, the famous debates who took place in 2018 on the CO2 objectives by 2030, ended in December with a compromise that set the required reduction at -37.5%.
It means, as ACEA - through its current President Carlos Tavares - has pointed out instantly that the EU is abandoning technological neutrality and forcing manufacturers wishing to sell vehicles in Europe to massively electrify their registrations.

As Carlos Tavares and others have also pointed out, as things stand at present, since batteries will represent 30% to 40% of the value of vehicles, will largely determine their performance in the eyes of consumers and since batteries will either be imported into Europe or manufactured by foreign companies using Asian produced cells, this decision could have highly problematic consequences:
 i/ The European automotive industry, whose export performance ACEA likes to highlight, could see its surpluses fall drastically;
 ii/ employment could be severely affected;
 iii/ the ability of manufacturers to control the core value of the products they offer in the future could be drastically reduced;
 iv/ industry's dependence on access to a number of strategic materials, including cobalt, would expose it to significant economic risks.

In a way, the German Minister and, in his wake, the French Minister of Economy Bruno Le Maire shared this analysis and understood that the EU had put the cart of the accelerated electrification of vehicles before the oxen of the continent's technological and industrial solutions.
They saw that those who were highlighting the problem were rushing to sign supply agreements with Japanese, Korean or Chinese champions and were thus going to make electrification the disaster announced.
However, instead of considering that this was a fatality imposed by the operating rules of a globalised industry, they tried to react by obtaining from Brussels that an industrial policy aiming at the creation of a European industry of batteries be recognised as an IPCEI (project of common European interest) from this semester.
This means that the project benefits from a regulatory framework that allows it to escape common European law on public funding and that industrial policy takes precedence over the sacrosanct defence of the consumer's interest, who could prefer, provided it is cheaper, a Chinese battery - possibly manufactured in Germany or Poland - to a subsidised European battery.

In taking this political course, the German and French Ministers for Economic Affairs are also asking manufacturers and equipment manufacturers to stop shouting about the Commission's irresponsibility in order to assume their own responsibilities.
Indeed, in 2018, the key players in the automotive sector do not want to invest in a sector that is still considered unprofitable and capital-intensive: neither the car manufacturers nor the German equipment manufacturers Bosch or Continental wanted to start manufacturing cells in the immediate future, thus leaving the field completely open to the Asian players, who rule without sharing in this market.
Indeed, the analysis made by most manufacturers and equipment manufacturers is that the real added value lies in the processes of combining cells in order to increase their performance, whether in terms of the autonomy of electric vehicles or charging time. The ministers would like to change this line and be able to ensure, without waiting for the next generation, the production of European cells.

In this perspective, the plan is already a little late. Renault works with LG and while Nissan once produced its own batteries as part of the joint venture formed with NEC in 2007, last August the manufacturer announced that it was abandoning it.
PSA announced in March 2017 that it had turned to LG and CATL. Similarly, Daimler, VW and BMW are preparing for 2030 without worrying about building the famous European industry wanted by the ministers: BMW has awarded a contract worth just over a billion euros to China's Contemporary Amperex Technology (CATL), which will build its site in Thuringia, to manufacture battery cells.
Volkswagen has also chosen CATL as well as South Koreans Samsung Electronics and LG Chem for battery purchases that could represent more than 21 billion euros.
Daimler announced in January without revealing whether its suppliers would continue to be SKI, LG and CATL, that 23 billion euros of cells were being purchased.

The OEMs, who almost all say they want the famous "Airbus of batteries" to take off, do not have time to wait and do not seem to be sure that they are concerned about it.
Ministers will have to get them more involved. Thus, the German minister seems to have convinced Volkswagen to join at least one of the consortia.
In October, BMW announced a partnership with Sweden's Northvolt and Belgium's Umicore to develop innovative and environmentally friendly batteries. Indeed, according to Peter Cammerer, member of BMW's works council: "Racing for the technologies of the moment is useless" and the problem is therefore to prepare for the "post-lithium era" by focusing on technologies considered promising such as sodium-ion or magnesium-ion. Varta Microbattery, BASF and Ford's German subsidiary, Ford-Werke GmbH, are in discussions with the Ministry of Economy.

Siemens will be part of the consortium that will be formed around Saft, which was acquired by Total in 2006. For the two French manufacturers who, during the Paris Motor Show, both seemed to consider that it was necessary to aim for the post-lithium-ion era, we are waiting to know if and how they will join this or that consortium.

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Translatedwithwww.DeepL.com/Translator, corrections by Géry Deffontaines

 

La chronique de Bernard Jullien est aussi sur www.autoactu.com.

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