There are indications the initial flood of foreign companies into Hungary and Poland has exhausted the relatively small pools of qualified labor in those markets, while over the past two years demand has been increasing. “The automotive heartland that is Germany has showed battery makers this is the place to be,” says Di Bitonto.
There are other reasons to build battery factories in close proximity to where cars are produced. In today’s car industry, “just in time” is a mantra. Shipping batteries from Asia takes up to two months, an eternity in the precisely timed automotive world. “You simply can’t afford to have millions of euros worth of batteries sitting on a ship for six to eight weeks,” Di Bitonto says. “Manufacturers have to be closer to where the batteries are needed.”
Less transportation is better for the environment, too. Farasis’ Wolf asserts that sustainability was a major factor behind his company’s decision to build a major new battery plant in Germany. After Farasis signed a contract with Daimler to produce batteries for their e-cars in 2018, the next step was to open a European production center. “We knew, if we wanted to make a sustainable product, we couldn’t be transporting heavy products by ship,” says Wolf. “We decided to produce in Europe for Europe.”
With labor costs, electricity prices and proximity to Daimler and other major car manufacturers all important considerations, Farasis settled on the eastern German state of Saxony-Anhalt, signing a deal in late 2020 to invest EUR 600 million in a new plant in Bitterfeld, near Leipzig.
A “must” for international companies
Stefan Bratzel predicts that establishing subsidiaries in Germany will become “a must” for foreign companies hoping to make it in the European market. “What is quite attractive is that we have car manufacturers with production plants in Germany,” he says. “And when you’re a supplier, it’s better to be closer to production.”
That holds true for the whole supply chain, experts say. Battery manufacturers need components, too – particularly housing, connectors, coatings and the many specialized chemical components required to make a battery. “You need deep pockets to build a battery plant,” Di Bitonto says, “but it has a multiplier effect – a lot of smaller suppliers are also necessary. There are so many ways all these companies can find opportunities in Germany.”
SVOLT expects its operations in Saarland will employ 2,000 people directly and create thousands of ancillary jobs on top of that. “There are going to be a lot of services and suppliers,” Wollenhaupt says. “And for a lot of that we are looking for strong partners so we can focus on our own core business.”