The German government has allocated funds worth $1.2 billion to support a consortium aiming to produce electric car battery cells along with a research facility to develop next-generation solid-state batteries, three sources told Reuters.
Reports suggest that the move is aimed at reducing the country’s automaker’s dependency on Asian electric vehicle battery suppliers and hence protect local jobs which are at a risk of shifting away from combustion engines.
This move could be a shift from Germany’s traditional “hands off” approach to business decisions and is a part of European efforts to forge battery alliances to challenge the dominance of Chinese, Japanese and Korean firms.
Automotive industries in Germany play a vital role in its economic status, hence, ensuring primary contribution from local companies could be crucial. However, experts suggest that Germany’s entry into the scene would be expensively late considering that the Asian markets have already ramped up their production creating a risk of glut.
“We have a concentration of risk in the automobile sector. The industry is too dependent on the combustion engine,” Deputy Economy Minister Christian Hirte told Reuters. “The government, therefore, wants to help the sector in its efforts to diversify.”
“There are possibilities for example in the Lausitz region, maybe in cooperation with Poland,” said Hirte, who is the government’s coordinator for Eastern German affairs and for small- and medium-sized enterprises policy.
“One thing is clear: you cannot ignore east Germany if you are planning such mega projects. There is a lot of space and the acceptance among the population is great.”