German auto-parts maker Bosch has confirmed it is dropping plans to manufacture battery cells and “disbanding” battery-related research as the result of “a lengthy economic assessment”.
Bosch said investing in the commercialisation of cell technologies itself— whether improved existing technologies or future ones— is “too risky” and it will instead focus on out-sourcing.
The company said it would dissolve its lithium-ion technology joint venture, Lithium Energy and Power, and sell Seeo— a subsidiary that conducts research into solid-state batteries. The move is despite Bosch admitting researchers to date have made “excellent progress” on solid state.
But Bosch will continue working with other cell suppliers for hybrid/electric vehicles and buy battery cells from them to develop its battery-management systems, 48-volt battery systems and in drawing up specifications for cells.
According to Bosch, the high cost of an initial investment into cell production, plus operating and manufacturing costs, would “leave only a narrow scope for creating and exploiting competitive advantages”.
“For a competitive, market-relevant cell manufacturing operation, calculations showed that the initial investment alone would be some EUR 20 billion ($24.5bn),” Bosch said. “This sum would allow the company to set up manufacturing capacity of approximately 200GWh, equivalent to a 20% market share, and thus a leading position in the market.“
However, in addition to the initial investment, “there would be operating costs running into billions, and three-quarters of the manufacturing cost would be cost of materials”, Bosch said. “This would therefore leave only a narrow scope for creating and exploiting competitive advantages.”
Bosch board member and chairman of the firm’s mobility solutions business, Dr Rolf Bulander, said: “For Bosch, it’s important to have a technical understanding of cells. We don’t have to make them ourselves.”
Despite its aim of being a leader in the electromobility mass market from 2020, Bosch said it is unclear whether its investments in cell manufacture would pay off.
In-house cell manufacturing “is not decisive for success in electromobility”, the company said.