Beset by gigafactory failures including the bankruptcy of Northvolt and the shelving of Stellantis-backed Automotive Cells Company plant in Kaiserslautern, the German battery market has shown resilience led by innovation, writes James Snodgrass.
If you’re not from Germany, and are asked to think of words to describe the country’s manufacturing mindset, you will likely think of words like “efficiency” or “precision”. Indeed German companies have leaned into this perception, marketing “Made in Germany” as a guarantee of quality and reliability.
Like all national stereotypes, there is some truth behind the generalisation but it’s not hard to point to examples of where efficiency and precision have not been applied with ruthless exactitude: the fiasco of Berlin’s Brandenburg Airport comes to mind.
Germany’s battery market expanded, but in a messier way than industrial policy once imagined. Over the past year, German battery production has recovered, large-scale BESS has accelerated, recycling has become a strategic industry, and alternative energy storage has gained credibility. Yet the country’s cell manufacturing ambitions remain caught between European sovereignty, Asian supply-chain reality and the hard economics of scale. Despite growth in 2025 after a significant drop in 2024, the most politically visible part of the value chain – which is domestic cell manufacturing – remained fragile.
The headline numbers certainly suggest recovery, with lithium-ion battery output rising by 28% year-on-year to €4.6 billion. Across all chemistries, production reached a record €8.1 billion, up 11%, while the total German battery market rose by around 9% to €22.4 billion. But the same data also reveal a structural problem: imports stood at about €22 billion, with China alone accounting for roughly €11 billion, up 25%. Exports, by contrast, slipped 2.5% to €7.8 billion. Germany was producing more batteries, but it was still deeply exposed to imported cells, materials and components.
The EU’s Net Zero Industry Act target of meeting 40% of annual battery-cell demand from domestic production by 2030 provided the policy backdrop, but German industry warned that the local battery ecosystem remained vulnerable to supply-chain pressure, Asian competition and the scaling gap between research and high-volume manufacturing.
Battery manufacturing
Volkswagen’s PowerCo remained the country’s anchor project. VW group’s Salzgitter gigafactory was designed for an initial annual production capacity of up to 20GWh, expandable to 40GWh, with the first stage equivalent to around 250,000 electric vehicles a year. Volkswagen presented the project as a European industrial statement, with CEO Oliver Blume calling the Salzgitter plant “a strong technological signal for Europe”.
PowerCo also began producing its first unified cells in Salzgitter. The format is intended to standardise Volkswagen’s battery architecture across future models, reducing complexity while improving energy density. In this respect, Salzgitter is not merely a factory project; it is an attempt to turn battery cell design, manufacturing and vehicle architecture into one integrated system.
CATL’s Arnstadt plant, meanwhile, continued to represent the other side of German battery industrialisation: local production, sure, but under Chinese ownership. The Thuringia site has been producing cells since late 2022 and was originally planned with annual capacity of 14GWh. CATL has linked the plant to European premium EV programmes, including the all-electric Porsche Macan and Audi Q6 e-tron, and said it was expanding testing capacity at the site. Matt Shen, general manager of CATL’s European business, described the expansion as “an important step to meet the growing demand for advanced battery solutions in Europe”.
Tesla’s Grünheide (AKA Giga Berlin) battery plans shifted into a more concrete phase, despite a small fire in August 2025 which temporarily halted production. The company added $250 million to its German battery cell programme and set out plans for 18GWh of annual 4680 cell production, with more than 1,500 jobs. André Thierig, senior director manufacturing at Giga Berlin, called it “good news during challenging times for the German industry.” Good news, perhaps, but also a reminder of how expectations had been scaled back: the 18GWh target was far smaller than Tesla’s earlier ambitions for Grünheide.
Leclanché added a smaller but strategically interesting project at Willstätt. Its EU-funded WGF2G programme is intended to establish a 2GWh NMC lithium-ion cell gigafactory using PFAS-free production processes, with the company also positioning the project as a route to lower-emission European cell production.
But some of these projects were derailed by high-profile reversals. Porsche’s decision to shut down its Cellforce subsidiary in May this year was an embarrassment for a company that had been perceived as a Tesla-killer. Cellforce had been established to develop high-performance cells for Porsche, yet the company concluded that the subsidiary “no longer has a sufficiently viable long-term perspective”.
Only months earlier, Cellforce’s CF3_at_Scale project was one of six projects selected for a share of the European Commission’s €852 million Innovation Fund battery initiative. When Cellforce withdraw from the project, the remaining five projects received grants totalling €643 million. This episode exemplified the problem facing Europe’s battery strategy: grant support can help, but it cannot by itself overcome insufficient volumes, underused capacity or a lack of economies of scale.
Other projects faced similar pressure. ACC paused work on its German and Italian battery plants amid weaker EV demand and the move by automakers towards lower-cost chemistries. Northvolt’s German ambitions also entered a new phase after Lyten moved to acquire the Heide project and associated assets from Northvolt Drei. The former Northvolt site could still become part of Germany’s battery story, but no longer in the form originally envisaged.
If there was a more encouraging manufacturing thread, it lay in process technology. And to justify our headline, we should look at German innovation in dry electrode coating.
Dürr presented X.Cellify DC as a solvent-free dry coating process that could reduce energy consumption by up to 70% and required production space by up to 65%. The company said that the process produced a stable, free-standing electrode film that remained recyclable until lamination.
Bernhard Bruhn, vice-president of Dürr’s Global Business Unit LIB, described the proof of concept as “a major step forward”, adding that the process could be scaled for gigawatt-hour pilot projects.
Fraunhofer IWS continued to promote DRYtraec dry coating as a route to environmentally friendlier battery cell production, while Matthews Engineering’s Vreden development centre offered an equipment pathway from lab-scale dry electrode trials to larger industrial machinery. Frank Bogenstahl, senior vice-president at Matthews International, described end-to-end scalability as “a key technical differentiator”.
Battery Research
The national challenge for Germany is not a lack of ideas, but the familiar European difficulty of transitioning from laboratory competence into manufacturing scale.
Fraunhofer IWS in Dresden continued to position dry coating as a route to more efficient, lower-emission battery manufacturing. Fraunhofer ILT, meanwhile, highlighted laser processes for solid-state batteries, arguing that lasers could help overcome interface and scaling challenges in next-generation cells. Project manager Bozhidar Stoyanov said: “The key advantage of solid-state batteries lies in their intrinsic safety,” while also noting that solid-state cells would exist alongside conventional lithium-ion batteries rather than simply replacing them.
The German research ecosystem isn’t chasing a single “next battery” but hedging on different chemistries and technologies: process-optimised lithium-ion production, solid-state manufacturing routes, sodium-ion alternatives, sulphur-based technologies and recycling processes that can support multiple chemistries.
TU Braunschweig’s Battery LabFactory operates across the value chain, from material development and electrode production to cell manufacturing and recycling, and has continued adding pilot-scale capability.
Münster also strengthened its position as one of Germany’s most important battery clusters. The BATTL3 project at BatteryCityMünster is creating a 1,600m² facility for up to five SMEs, with completion expected in late 2027. The city already links MEET Battery Research Center, Helmholtz Institute Münster, Fraunhofer FFB and other research bodies, giving it a concentration of battery knowledge that few European regions can match.
Sodium-ion gained particular attention through Berlin Battery Lab, a joint platform involving BAM, HZB and Humboldt-Universität zu Berlin. The platform focuses on resource-efficient battery technologies, including sodium-ion systems, and is intended to give external academic and industry partners access to infrastructure that can shorten the route from research to application.
This is where Germany’s research priorities increasingly overlap with its supply-chain vulnerabilities. Sodium-ion does not solve every problem; it is generally less energy dense than lithium-ion. But it offers potential advantages in cost, raw-material availability and stationary storage applications (particularly now that politicians are using Li-ion BESS fires as an excuse for reversing renewable energy targets).
The same applies to solid-state and sulphur chemistries. They should not be considered as immediate replacements for LFP or NMC, but as part of a broader attempt to keep Europe relevant in the next manufacturing cycle.
German universities often fail to attract the venture capital to create spin-outs – like we see in the US (Stanford, for instance) and the UK (Imperial, for instance)–and this is partly because of the way they are funded. One academic we spoke to said that the way German universities are funded – on a state level, not a federal level – is an impediment to the commercialisation of research. Germany’s research base is strong – without question – but the big question is whether its companies can afford to wait long enough for these processes to mature.
Battery energy storage systems
The German BESS market told a far more dynamic story in the last year.
Battery Charts data indicated that Germany added around 6.57GWh of stationary battery storage in 2025, taking total installed capacity to about 24GWh at the start of 2026. The structure of that growth, however, was changing. Home storage still dominated by volume, with 4.19GWh added in 2025, but residential additions fell by 6.4%. Industrial storage added 0.36GWh, up 47%, while large-scale storage added 1.28GWh, up 81%.
By the end of March 2026, cumulative German battery storage had reached 27.23GWh and 17.90GW across more than 2.4 million systems. Residential systems accounted for 20.75GWh, commercial and industrial systems for 1.42GWh, and large-scale systems for 5.06GWh. March 2026 alone added 522.9MW and 985.9MWh, close to the first one-gigawatt-hour month for new storage capacity. Caveat: different data sources vary because of registration lag and classification methods.
The Bundesnetzagentur (Federal Network Agency) said around 526,000 new batteries were installed in 2025, adding 3.7GW and 7.3GWh, and bringing the national total to about 25.5GWh and 16GW. But the direction of travel is consistent: the German BESS market has moved well beyond early residential adoption.
The project pipeline now includes very large assets. BW ESS broke ground on a 1GW/up to 5.7GWh project at Klostermansfeld in Saxony-Anhalt, one of the largest battery storage projects in Europe. Envision Energy partnered with Elements Green on the 400MW/1.6GWh Stadorf BESS in Lower Saxony. EnBW announced a 400MW/800MWh battery at Philippsburg Energy Park, while ADS-TEC Energy secured approval for a southern German project of around 1GW output and approximately 2GWh of storage capacity.
Financial investors also moved into the market. Aviva Investors committed €150 million to Terra One to support battery storage assets in Germany, with an initial portfolio of around 500MW expected to be operational by 2028. SMA Altenso and MEAG advanced a 130MW/354MWh project at Höxter, and Noveria signed an agreement with TenneT for a 1GWh project scheduled for 2028.
The scale of developer interest has created its own problem: grid connection queues. In 2024, German grid operators received 9,710 connection applications for battery storage projects at medium voltage and above, representing planned capacity of 400GW and 661GWh. Clean Energy Wire reported that grid operators had granted about 3,800 requests, equivalent to 25GW and 46GWh, while the Bundesnetzagentur cautioned that granted requests did not necessarily mean projects would be built.
Germany does not have a 661GWh near-term BESS market; it has a grid application system that is being overwhelmed by speculative, duplicated and early-stage requests. But even after allowing for attrition, the volume of projects indicates how quickly the market has shifted. Storage is no longer a marginal accompaniment to solar PV. but a core flexibility asset in a power system.
The economics are changing. Standalone batteries depend on revenue stacking: arbitrage, frequency response, congestion relief, capacity mechanisms – where available – and bilateral optimisation for large energy users. Which raises the question: how should storage be valued when it is both a private trading asset and a public grid resource?
Recycling
Aurubis opened its Complex Recycling Hamburg plant, in July 2026, integrating multiple smelting processes into a single recycling system. Once fully ramped, the plant is expected to process more than 30,000 tonnes of additional recycling material a year, recovering copper, lead, precious metals and other valuable materials. Aurubis is positioning the Hamburg project as part of Europe’s critical-metals circular economy.
In April this year, BASF and TSR Group announced a cooperation on EV battery recycling in Europe. The partnership covers dismantling and discharging end-of-life batteries and processing spent batteries into black mass, the intermediate material containing lithium, nickel, cobalt and manganese. For BASF, the move fits with its cathode-materials and recycling strategy; for TSR, it extends scrap and recycling capabilities into a higher-value battery materials stream.
Cylib provided one of the clearest examples of German recycling scale-up. The Aachen company is building recycling capacity at Chempark Dormagen and has received public support for both lithium-ion and LFP recycling projects. It also leads SIB, a 25-partner German consortium intended to develop an industrial sodium-ion battery recycling process by 2029, backed by €14.5 million of Federal funding.
Meanwhile, Munich-based Tozero is developing hydrometallurgical recycling routes for graphite, a material that makes up a large share of battery anode mass and is heavily concentrated in Asian supply chains. Reuters reported that Tozero aims to reach around 2,000 tonnes a year of recycled graphite by 2027, enough for about 50,000 EVs.
From 2030, EU battery rules will require minimum recycled content in EV batteries, including lithium, nickel and cobalt, with higher thresholds following in 2035. Recycling offers a domestic feedstock stream at a time when European cell producers are exposed to imported raw materials, black mass export restrictions and volatile commodity prices.
Alternative energy storage
Rondo Energy’s heat battery project with Covestro at Brunsbüttel – announced in March 2026 – is a 100MWh thermal storage system scheduled for completion at the end of 2026. It is intended to provide around 10% of the site’s steam demand, saving up to 13,000 tonnes of CO2 a year. In industrial decarbonisation terms, the project matters because it uses electricity to store heat directly, rather than converting electricity into electrochemical storage and then back into heat.
In December last year, Skeleton Technologies opened its €220 million SuperFactory near Leipzig for supercapacitor production. The company has positioned its technology for high-power applications, grid support and data-centre resilience, and said the factory was already delivering to major industrial customers. Supercapacitors will not displace batteries for long-duration storage, but they can complement them where high power, fast response and long cycle life are more important than energy density.
CMBlu Energy, which develops organic SolidFlow batteries for long-duration applications, crossed a €1 billion valuation in May this year after a Series C financing round. Its technology sits in the space between conventional flow batteries and newer organic electrolyte systems, targeting utilities, commercial and industrial users, and data centres.
Compressed-air storage reappeared through Augwind and SEFE’s plan to study an AirBattery project in Germany. The system combines compressed air energy storage with hydraulic principles, using a salt cavern as part of the storage architecture. Demonstration data has indicated AC-to-AC round-trip efficiency of 47%, which is lower than lithium-ion but potentially relevant for longer-duration storage where energy cost, storage duration and geological availability matter more than compactness.
Berlin-based Theion has been working with sulfur chemistry. The company is developing lithium-sulfur crystal batteries, targeting high energy density with reduced reliance on nickel, cobalt and graphite. The technology remains earlier-stage than lithium-ion BESS, but the company claims its batteries will have three times the energy density of Li-ion whilst also being three times less expensive to produce and having one-third the carbon footprint.
These alternatives are not be overhyped. Lithium-ion remains the dominant technology for EVs and short-duration grid storage. But alternative storage is becoming more credible because the use cases are becoming more differentiated.
Conclusion
Germany is finding a more realistic battery role. It may not dominate global cell production, but it can still carve out important niches in process equipment, battery research, high-value manufacturing, grid storage, recycling and alternative energy storage. The more cautious reading is that these strengths will not compensate for a weak cell-manufacturing base unless Europe can turn policy targets into bankable demand.
The battery economy is broadening – and Germany’s best chance may lie in recognising that the market is bigger than the cell.
