Lead market and lead supplier study “Lithium-ion batteries for electric mobility” 2018 – does Germany still have a chance?


In its energy storage monitoring study 2018, Fraunhofer ISI examines which are the leading countries in battery technologies for electric mobility and which is the lead supplier and the lead market. The study shows that Germany must invest quickly and massively in production-related research and development and in developing human capital if it wants to play a role in the battery industry in the long term. The monitoring report, which has been done every two years since 2014, compares the positioning of Japan, South Korea, China, the US, Germany and France using 30 indicators of categories such as demand, market structures, industry and research and technology.

According to the monitoring report, which is part of the German Federal Ministry of Education and Research’s (BMBF) funding program “Battery 2020”, Germany has been able to stabilize its position, but the dynamics here are slowing – as they are in all the examined countries– with the exception of China, which continues to strengthen its leading position. The researchers at the Fraunhofer Institute for Systems and Innovation Research ISI only give Germany/Europe up to about 2025 to develop competitive cell production. This date represents the tipping point of electric mobility – i.e. marks its transition from a niche to a mass market. The time until then is considered decisive for the global transformation to an era of electric mobility.

If Germany/Europe wants to be successful in the battery industry in the long term, at least 10 billion euros should be invested in production-related research and development and in developing battery cell production. Industry will have to invest the lion’s share of this, and around 100 billion euros in the long term. Even with extensive industrial policy, public funding can only contribute a fraction of this amount.

China is the lead market for batteries and electric mobility

The latest update of the energy storage monitoring study funded by the BMBF shows: China became the lead supplier for batteries between 2016 and 2018, and has developed into the lead market for batteries and electric mobility. Its success is due to politically induced high domestic demand and the simultaneous strategic development and expansion of the entire value chain. The study’s focus is on electric cars, but the picture would favor China even more if other battery-relevant markets like commercial vehicles or industrial and stationary applications were considered as well.

Dr. Axel Thielmann, who coordinated the monitoring study at Fraunhofer ISI, explains: “Germany – just like France - was able to maintain its overall position between 2014 and 2018, and in the four individual categories of demand, market structures, research and technology as well as industry. However, both countries are still lagging behind, although the global demand for batteries is set to increase drastically in the coming years”. According to Thielmann, this is likely to reach 1 to 1.5 terawatt hours around 2025 and already 3 to 6 terawatt hours around 2030. Since this demand is generated solely by electric car manufacturers (OEM) that produce battery-electric vehicles (BEV) or plug-in hybrids (PHEV), the market/demand indicators for Germany and Europe could improve in the coming years if the automotive industry remains strong. However, European suppliers and cell producers must react now – because it is currently the Asian cell producers from China, Japan and South Korea, who are expanding their cell production capacities in Europe. They are planning to expand the current capacity of more than 10 gigawatt hours at several European locations to a total of 60 to 100 gigawatt hours in the next years.

Problems with developing European cell production

There have been several delays to building up German/European cell production over the last years. Currently, there are a number of schemes with a varying degree of concreteness from European consortia planning to set up cell production. In the future, just holding onto the same position will not suffice in this growth market and could even mean an end to the German/European battery industry in the long term. A large part of battery value added is already situated abroad. Germany is better positioned when it comes to the system integration of battery cells, the final step in the value chain, because OEM and their suppliers concentrate on module and battery pack production and their integration into vehicles. In addition, there are numerous hurdles to overcome with regard to battery and vehicle development (range, fast charging, cost reduction etc.), the range of models offered and the charging infrastructure as well as developing sustainable battery recycling.

The Fraunhofer Institute for Systems and Innovation Research ISI analyzes the origins and impacts of innovations. We research the short- and long-term developments of innovation processes and the impacts of new technologies and services on society. On this basis, we are able to provide our clients from industry, politics and science with recommendations for action and perspectives for key decisions. Our expertise is founded on our scientific competence as well as an interdisciplinary and systemic research approach.