BEST: Could you give us an overview of the German battery manufacturing infrastructure, and the peculiarities of the German market that work to its advantage and disadvantage.
Friedrich Grupe: Germany has a very strong industrial base for battery manufacturing by international standards. There are established manufacturers of lead-acid batteries, with PowerCo being a major and growing producer of lithium-ion cells, as well as other, smaller cell manufacturers for specialist applications. Added to this is the German automotive industry, which acts as a key driver for battery construction and testing – although this is currently still frequently based on Chinese cells.
A key advantage for Germany is its highly capable SME sector, particularly in mechanical engineering and electrical engineering. This applies especially to plant manufacturers and test equipment producers such as Digatron, which make it possible in the first place for battery technology to be developed, produced and tested here to the highest standards. Germany has built up strong industrial expertise in this field over many decades.
At the same time, however, there are also significant drawbacks: excessive bureaucracy, high energy prices and high labour costs often make new projects unattractive or slow them down considerably. Germany therefore fundamentally has the industrial capacity, but the framework conditions are not always competitive enough to fully capitalise on this advantage.
How is German manufacturing dealing with continued high energy prices?
FG: The industry’s response is essentially two-pronged. Firstly, there is a strong focus on energy efficiency – both in production and in battery testing. Today, more than ever, everyone is investing in more efficient processes, better control technology and lower energy consumption.
Secondly, we are unfortunately also seeing an increasing shift of production abroad, where energy is cheaper and the overall cost structure is more predictable. Whilst this is understandable from a business perspective, it weakens Germany’s position as a business location in the long term. Politicians must now step in to create the right framework conditions to make investment in Germany attractive again.
A combination of REACH regulations and geopolitical pressures is decimating chemical production in Europe. It’s becoming an expensive continent for chemical companies to do business. How is German industry reacting to this challenge?
This development is particularly problematic in light of the aim to reduce dependence on non-European countries. If production, intermediate goods and core chemical expertise disappear from Europe, structural dependence on imports will continue to grow. This makes supply chains more vulnerable, reduces industrial sovereignty and weakens the ability to respond flexibly to geopolitical crises.
The real challenge lies in designing regulation, environmental and safety standards in such a way that they do not hinder innovation and production in Europe. If the costs of doing business are permanently higher than elsewhere, industry will inevitably relocate. This is not a sign of poor industrial quality, but a locational issue. Without competitive conditions, Europe will not be able to retain its chemical industry and, with it, part of its battery value chain.
Nearly four decades since reunification and Germany still has a pronounced East and West divide. But could this now give Germany an advantage over other western European nations: that it might actually have the land to build gigafactories and data centres, and bring prosperity to the “forgotten” Germany in the East?
FG: Yes, absolutely. Germany has an excellent infrastructure and a highly skilled workforce in both the east and the west. In the east in particular, a great deal was rebuilt after 1990, meaning that the industrial infrastructure there is, in many cases, more modern than in parts of the west. This provides a very good foundation for gigafactories and data centres.
If you want to implement large-scale industrial or digital projects quickly and efficiently, this is a real locational advantage. At the same time, however, it must be clearly stated that high energy prices remain a massive obstacle. They are the result of a German energy policy over the last 25 years that has been ideologically driven and, in my view, misguided. Added to this is the slow and far too complex bureaucracy, which often drags out approval procedures for years, thereby unnecessarily delaying or even preventing the construction of new facilities.
In short: Germany has the space, the infrastructure and the expertise – but without competitive energy prices and without a noticeable streamlining and simplification of bureaucracy, this potential will not be fully realised.
Germany is famous for its automotive expertise. Does the presence of VW, BMW, Porsche and Mercedes have a positive effect on Germany’s battery industry?
FG: Yes, definitely. The presence of these manufacturers is a major advantage for the German battery industry. It drives demand, sets technological standards and provides a strong industrial benchmark against which cell manufacturers, plant engineers, test laboratories and developers can measure themselves.
The German automotive industry is one of the main reasons why such a high level of expertise in battery technology has developed in Germany in the first place. It attracts investment, fosters supply chains and accelerates the industrialisation of new technologies.
At the same time, this influence is not only positive in the sense of ‘more business’, but also demanding: the OEMs set very high standards for quality, safety, service life and traceability. This is challenging, but it raises the entire ecosystem to a very high standard. This is precisely where part of Germany’s strength lies.
However, due to the significant influence of car manufacturers and suppliers on the battery market, fluctuations in the automotive sector have a direct impact on the battery market. This affects all players in this market – from machinery manufacturers and test equipment producers to engineering service providers and test laboratories. This major strength is therefore also a major weakness: the heavy reliance on a single industry.
Unlike most European countries, German universities are funded at a regional level, not a federal level. This would appear to be a disadvantage for German research, because the country doesn’t seem to have the industrial accelerators we see at US universities (and even Imperial College London). But are there any advantages to this system, and how well does battery research in German universities and institutions integrate into the German battery industry? Does it find routes to commercialisation.
FG: Battery research in Germany is technically strong and, in many areas, very practice-oriented. German universities and research institutes often work closely with industry, and this collaboration is, in principle, a major advantage. It helps to translate scientific findings into real-world applications.
Funding is a key factor here: whilst the core funding for universities is organised on a regional basis, in the battery sector in particular, the majority of funding comes from national and European funding programmes. This results in stronger supra-regional and international networking than one might expect from state funding alone.
I see another strength in the fact that, in many cases, successful start-ups emerge from research projects and university research. These companies commercialise the expertise developed and make it available to industry in a targeted manner.
The real challenge lies not so much in a lack of scientific quality, but rather in translating this into rapid industrial implementation, sufficient capital and competitive business conditions. When these three factors come together, German battery research can be very successfully translated into products and production processes.
Digatron is a leading European manufacturer of battery test and formation equipment, with its headquarters in Aachen, Germany, and additional locations in the USA, India, and Italy. For over 50 years, the company has supplied high-performance test and formation systems for all types of batteries and also develops research and pilot production lines for lithium cells. As a European technology provider, Digatron places particular emphasis on engineering excellence, quality, service, and energy efficiency. Further information is available at www.digatron.com.
