German automakers commit to massive battery purchases, sidestep some hard realities

2020 Mercedes-Benz EQC

Daimler, the parent company of Mercedes-Benz, last week revealed that it will be buying $23 billion in battery cells by 2030.

What it didn’t fully reveal—its sources for those cells—says as much, if not more about a point of unease among German automakers.

Battery packs—and specifically the cells inside—are the single most expensive component in an electric car, often costing as much as an engine, transmission, fuel, and exhaust systems combined for the gasoline-powered vehicles they replace, much of which is traditionally made by the German automakers directly or by entrenched suppliers. And there’s a lot of pressure, in the EU and elsewhere, to keep that manufacturing base at home.

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A European Battery Alliance exists, in part, for that reason. It estimates that with the EU taking a lead role in cell manufacture, it could create four to five million jobs.

In addition to that battery investment, Daimler will make an additional $1.1 billion investment into the construction of eight global battery factories—including one in Tuscaloosa, Alabama, and a joint venture with BAIC Motor in China. It’s already finished constructing the first of these, in Germany.

2020 Mercedes-Benz EQC

Daimler aims to electrify much of its passenger-vehicle fleet, with 130 electrified models (electric, hybrid, and plug-in hybrid) by 2022. It also has big plans to compete with electric commercial vehicles, including buses and vans.

The plan assumes, as it points out, that electric vehicles increase to 15-25 percent of total vehicle sales by 2025.

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BMW’s commitment to battery packs is also a big-money figure, but not quite in the same realm yet as Daimler’s number. It’s planning to source $4.7 billion from the Chinese supplier CATL, with some of that coming from a CATL “gigafactory” in Erfurt, Germany.

That follows a $200 million investment in a Battery Cell Competence Center that exists to test different cell types. BMW has given some indications it also may be looking to source batteries from the Swedish startup Northvolt.

Other European players that may become involved in cell manufacturing but aren’t yet involved on a significant scale include Saft, BASF, and Siemens.

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