The largest auto parts supplier in the world, Bosch, has decided that it won’t be manufacturing its own electric vehicle batteries, despite the booming of the sector, as the billions of euros of investment that would be required would pose too much of a risk to the company, as revealed in a new press statement.
So, to make that point again, the top automotive parts supplier to the German auto manufacturers has decided to not get involved in the electric vehicle battery supply market, which means that the firms that rely upon Bosch for parts, and were also possibly planning to rely on the firm for batteries at some unspecified date in the future, are out of luck.
Another point awarded to Tesla for the Gigafactory, in other words. As was predicted by many industry analysts even years back, the electric vehicle sector will pretty clearly be led by the firms that can lock up long-term battery supply contracts, or, even better, that can produce their own.
This news follows on numerous calls by prominent politicians in Europe for European manufacturers to produce electric vehicle batteries there, rather than rely upon imports and foreign firms. As it stands, LG Chem, Samsung, and Panasonic are far and away the leaders in the sector.
The statement read: “Given dynamic external market factors that can only be predicted with difficulty, it is unclear whether this investment would pay off for Bosch, and when.”
Reuters provides more: “Bosch had said it would only consider making battery cells if there was a chance it could capture a fifth of that market by 2030, a move it said would require about €20 billion ($24 billion) of investment to create 200 gigawatt hours of capacity.”
“In the overall interest of the company, such an investment is not justifiable,” explained Rolf Bulander, the head of mobility solutions at the firm, on a conference call discussing the matter. “For new entrants, market conditions are more than challenging.”
This comment was followed with the statement that Bosch would instead work with battery cell suppliers to design cells for electrical vehicles, and then buy these cells from them.
Why wouldn’t most auto manufacturers just buy cheaper battery cells from the major battery cell manufacturers themselves, you ask? Who knows, presumably Bosch must be planning some kind of valuable add-ons, or the plan just amounts to a Hail Mary. Or perhaps it’s just a matter of there already being back-room deals worked out between Bosch and prominent German auto manufacturers?
“To be a significant player in electric mobility we don’t need to produce the cells by ourselves,” Bulander asserted.
I’ll note here that I remain a skeptic of the Bosch approach…to put it lightly.
It’s seeming more and more likely as time goes by that Tesla has created for itself, through its close partnership with Panasonic, an enormous advantage over most of the other auto manufacturers out there. What auto companies out there have anything that can even remotely compete with the Tesla/Panasonic Gigafactory? Are any companies even planning anything comparable?
Accompanying the announcement from Bosch was the revelation that the company would be completing ceasing further research into battery cell tech (a pit which the firm has already dropped €500 million into) and that it would be dissolving its related joint-venture, dubbed Lithium Energy and Power GmbH & Co KG (LEAP).
And, the company will also be selling the US-based lithium-ion battery tech firm Seeo, which was only acquired in 2015. That firm was, of course, acquired for the specific purpose of giving Bosch a foothold in the electric vehicle battery sector. I suppose that things didn’t work out in that regard?
In other words, the company seems to now be running for the exit.
Oh, and a final note, Bosch’s Bulander was quoted as saying that the recent ruling in Germany concerning the legality of diesel car bans on the city-level wouldn’t have any effect on new diesel car registrations.
Bulander stated: “The market is looking for secure framework conditions, then it will decide in favour of diesel vehicles.”
And some Germans wonder where they get the reputation that they have internationally?
I’ll end things here with a couple of relevant links, for those wanting some further background on the situation: German Court Hands Down A Death Sentence For Diesel; Daimler Warns That Falling Diesel Car Sales & Switch To EVs Could Trigger Supplier Bailouts; Volkswagen, Daimler, & BMW Sponsored Diesel Exhaust Testing On Humans & Animals.