On the road to carbon-neutral mobility, lithium-ion batteries for electric vehicles are currently in such high demand that supply bottlenecks at cell suppliers are possible. Even though the age of electric mobility is just starting: What preparations must the German auto industry make to safeguard production capacities worldwide? And how do the manufacturers manage to reduce the carbon footprint despite the high production complexity? In this part of our special “Battery Life Cycle”, we examine how cell and battery production at Daimler dovetail.
The European Commission estimates that electric vehicles will have a market potential of 250 billion euros in Europe by 2025.¹ They are supposed to be powerful, but also competitive and produced in a sustainable way. That is why Daimler is investing massively, over one billion euros, in the expansion of its global production network. In future, the network will comprise nine battery factories at seven locations in Europe, North America and Asia.
Battery production worldwide
The parent plant of the wholly owned subsidiary Accumotive in Kamenz plays a key role for Mercedes-Benz: As a center of competence for the global battery production network, it has been producing traction batteries for electric and electrified vehicles from Mercedes-Benz and smart and well as for light-duty commercial vehicles since 2012. In addition, the in-house battery production gives the company the possibility to satisfy one of the most important demands in the current mobility debate: reducing CO2 emissions from not only driving, but along the entire value chain.²
That is why the production at new locations such as at the battery factory in Kamenz is carbon-neutral from the start. After the second plant, likewise designed to be carbon-neutral, came online in 2018, the Mercedes-Benz subsidiary has been gradually increasing its production capacities and volumes. The annual production volume will soon exceed half a million battery systems for hybrid, plug-in hybrid and all-electric vehicles.³ If you add other manufacturers on the world map, an ever more tightly woven quilt of high-efficiency battery factories emerges.
And the cells?
When it comes to battery production, Daimler is in a good position. But why is the auto industry not getting more on board with in-house cell production? Amongst others, the meager margin plays a decisive role: the material costs alone already account for 70 percent of the total price. Numerous Asian companies have been among the bulk buyers of the raw materials suppliers for years and were able to specialize in cell production, which the automakers can draw upon with long-term cooperative ventures.⁴ That is what is crucial at the moment. Because: demand is growing and experts reckon that five years from now some two thirds of all the lithium-ion batteries produced worldwide will be needed for electric mobility. So, who are the right partners in the race for the best electric cars?
Mercedes-Benz purchases battery cells on the world market. The company works closely with different suppliers and purchased quantities worth 20 billion euros for the coming decade. In the selection of the suppliers, Mercedes-Benz focuses primarily on a long-term objective: climate neutrality. Together with the Chinese battery cell manufacturer Farasis Energy (Ganzhou) Co., Ltd.,⁵ Mercedes-Benz has launched a far-reaching strategic partnership including taking an equity stake. This move represents another important milestone towards Mercedes-Benz’s “Ambition2039” CO2-neutral goal. Key elements of the agreement include the development and industrialization of highly advanced cell technologies, accompanied by ambitious goals for cost competitiveness. The technological focus is on significant increases in range through advances in energy density and the reduction of charging times. The contract will provide a secure source of supply of battery cells for Mercedes-Benz’s electrification strategy, while Farasis gains security for its planned construction of production capacity. Farasis Energy, for example, will deliver battery cells out of CO2-neutral production. Thereby the carbon footprint of the whole battery is reduced by 30 percent in future electric models. The goal is to optimize the environmental compatibility of the battery with a sustainably designed value chain.
New gigafactories for Europe
Business with the production of battery cells is booming. Several cell factories are currently under construction, in particular in Eastern Europe, most of them owned by Asian manufacturers. Chinese company CATL intends to build a battery factory in the German city of Erfurt, which is supposed to reach five times the annual production capacity of to date's largest factory in Nevada by 2026.⁶ Tesla is currently laying the foundations of a new gigafactory in Brandenburg in Germany, which is slated to start production in 2021. Farasis intends to supply Mercedes-Benz with battery cells for the EQC from a plant in the German town of Bitterfeld-Wolfen starting in 2023.
While cell manufacturers are gradually expanding their capacities in Europe, Mercedes-Benz is now also active with its battery factories in the important markets directly. Knut Johannsen is responsible for global battery production planning at Mercedes-Benz and is strongly convinced of one thing: “Imagine: an EQC battery is about 2.3 meters long, 1.6 meters wide and twelve centimeters high. Only producing the batteries at a single location would involve a substantial logistical expense." (read more)