This is an expensive meeting for taxpayers next Tuesday in the Swabian Jura. Three ministers travel with suitcases to help get ahead with a future technology in Ellwangen: The development and production of highly efficient battery cells at Varta.
The company with the famous name has developed rapidly in the recent past. The stock price has quadrupled since going public almost three years ago.
When it comes to small batteries for hearing aids or headphones, Varta is the world market leader. And with the takeover of Varta household batteries a year ago, the company has expanded even further.
But the economics ministers Peter Altmaier (federal government), Nicole Hoffmeister-Kraut (Baden-Württemberg) and Hubert Aiwanger (Bavaria) do not come to the Alb because of the batteries for electrical devices or flashlights. They are interested in the future business with rechargeable high-performance cells. And they are mainly used in electric cars.
Car battery cells exclusively from Asia
So far, only Asian companies have been producing battery cells for the electromobile age. VW, Daimler and BMW have secured cells from Samsung, SKI, LG Chem and CATL for tens of billions each until the middle of the decade. But what happens then?
The oligopoly of cell companies can dictate prices and keep the market tight. There are scenarios according to which 2025 will be missing up to 100 gigawatt hours (GW) in Europe alone. That would be somewhat the capacity for two million mid-range electric cars. With a lot of money, politicians are now trying to build European production facilities by 2025 and create a closed value chain for the automotive industry.
Opel wants to build in Kaiserlautern
In Germany alone, the taxpayer is there with 1.75 billion euros. Within the framework of the IPCEI projects (for Important Project of Common European Interest) approved by Brussels, the federal government is taking over 1.22 billion euros and the federal states with cell projects 524 million euros.
To date, Altmaier has announced funding for the following companies: BASF, which produces cathode material for cells in Schwarzheide in Lusatia; a French-German project with Saft and PSA / Opel, which are planning cell production in Kaiserslautern, as well as BMW and the cell manufacturer Customcells from Itzehoe, about whose projects there are no details yet.
Varta is the first company where the ministers personally deliver the approval notice. The company from Ellwangen can look forward to over 300 million euros, Altmaier brings more than 200 million. 59.5 million come from the Baden-Württemberg household for the Varta home base in Ellwangen and a good 30 million euros from the Free State of Bavaria for the Varta location in Nördlingen, which is around the corner from Ellwangen on the Bavarian part of the Swabian Jura.
With the money from the federal and state governments, Varta wants to develop the next generation of lithium-ion cells. “Our goal is to increase the energy density by up to 50 percent in the next few years,” the company said on request. “Among other things, we achieve this through silicon in the anode.”
A new round cell is to be developed
Varta also plans to develop a round cell at its headquarters in Ellwangen, which is also a prospect for car batteries. The company refers to the application areas of the new cell as “robots but also driverless transport systems. These batteries and our technology could also make an important contribution to new, future-oriented vehicle concepts. ”
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Varta hired a good 500 employees in the Ellwangen-Nördlingen region last year and is looking for another 1000 in the next twelve months. The listed medium-sized company currently employs around 4,000 people. “We are increasing our capacities significantly faster than planned this year and will already have a production capacity of around 200 million lithium ion batteries per year at the beginning of next year,” said Varta. According to the original planning, the 200 million mark should only be reached in a few years.
Corona doesn’t matter
The company was also unable to take the corona virus off course. It was “actually got through the first wave of the Covid 19 crisis unscathed”. And it was going well up to the wave anyway: sales in the first quarter rose by 170 percent to EUR 199 million, and the consolidated profit even by 265 percent to EUR 24.5 million.
The margin in the core business of microbatteries was 34.3 percent. Only the US platform monopolies are otherwise so profitable. With sales of around 800 million euros, Varta expects a profit before taxes (Ebitda) of 180 million euros this year.
Tax money for a profitable company
Although Varta is highly profitable, the tax money is easy for politicians. Because “scaling up is associated with considerable risks, since the product development and the development of the production technology must take place simultaneously”, as the Stuttgart Ministry of Economic Affairs says.
Altmaier absolutely wants a large-scale industrial cell production that car manufacturers and large suppliers are afraid of because of the huge entry-level investments. “If they don’t do it, we’ll do it ourselves,” Altmaier had issued the motto years ago.
