In February, Matthias Zentgraf, the leader of CATL’s European operations, shared with Electrive that the original plan to produce 14 GWh per year of batteries will be just a drop in the proverbial bucket. “With realistic planning, we assume — calculated at a low level — a demand of 100 GWh in 2025,” Zentgraf said. That would compete the output of Tesla’s Gigafactory 1 in Nevada.

 

The company declares its new investment strategy has come about after its board of directors reassessed the development of its overseas battery business in light of changes in demand happening in Europe. “Behind CATL’s move is an outburst in Europe’s EV industry, as some prominent German brands like BMW and Volkswagen are changing their strategies from traditional internal combustion cars to EVs,” Feng Shiming, managing director of Menutor Consulting Shanghai, told the Global Times. “A division of labor with China’s advantage in batteries and Germany’s advantage in car production is the best choice for German companies.”

 

The company anticipates the batteries produced at the new factory in Erfurt will supply customers such as VW, BMW, Daimler, PSA, Volvo, and Jaguar Land Rover. German authorities worry that Asian battery companies will dominate the market for EV batteries in Europe and prefer to see German auto manufacturers invest in battery production. Federal Minister for Economic Affairs and Energy Peter Altmaier says he would like companies in Germany and the rest of Europe to produce about 30% of worldwide demand for battery cells by 2030.

 

But up to now only Volkswagen has moved in that direction. It intends to construct a battery factory in Salzgitter together with Northvolt that will at some point be capable of producing 24 GWh of batteries a year. Northvolt is also building a battery factory of its own. But many other German manufacturers have shown very little appetite for making their own batteries. The majority are concerned that new battery technologies will be available soon that may render existing factories obsolete.

 

That is actually a risk, but one that Tesla and many Asian companies are willing to assume. As the EV revolution grows, there'll be tumultuous changes in the auto industry. Some companies will emerge tougher and some may fail to thrive. Standing on the sidelines watching as those changes occur is probably not the best long-term strategy. 

 

Source: Tronserve