Bosch Takes Own Battery Cell Production Off the Table
Bosch wants to become the global market leader in electromobility. However, the company decided that this aim won’t require an in-house production of battery cells.
The Bosch technology group is aiming high: The supplier strives to become the market leader in the mass market for electromobility that is expected to emerge as of 2020. According to Bosch, the company wants to exploit its existing system know-how and develop and produce key components of electric drives such as electric motors, power electronics and battery systems.
Now, the company clearly rejected in-house battery cell production — a decision that has been widely discussed in Germany and Europe. According to a press release, Bosch intends to continue buying cells for the construction of battery systems in future. For economic reasons, it was decided not to set up an own cell production facility. “For Bosch, it is important to have a technical understanding of the cells, but we don't have to manufacture them," says Dr. Rolf Bulander, Managing Director of Robert Bosch GmbH and Chairman of the Mobility Solutions Division.
Currently, established OEMs are expanding their portfolio with numerous electrified models. At the same time, start-ups are entering the market with new electromobility concepts. Bosch intends to respond to this market development with its e-mobility strategy and, according to Bosch, make electric driving more suitable for everyday use and ready for the mass market. In addition to vehicles, Bosch also develops solutions for the required charging infrastructure.
Center of Competence Created
Despite the rejection of its own battery cell production, Bosch intends to continue designing and purchasing the cells for hybrid and electric car batteries together with cell suppliers. For this reason, the company is cancelling its research activities in the field of current and future cell technologies that were conducted to evaluate an in-house cell production. The joint venture Lithium Energy and Power GmbH & Co. KG (LEAP) will also be dissolved. In addition, the subsidiary Seeo, which conducts research into solid-state cell technology, is to be sold.
Bosch intends to further develop the know-how in the field of battery cells that it has built up over the past few years in a Center of Competence. In addition, a medium three-digit number of employees is to be employed in the field of battery systems. According to the company, they will develop battery management systems and 48-volt battery systems and specify cells.
Irrespective of the decisions taken, Bosch stated that it sees great technical potential in solid-state technology. “On the technical side, we have made very good progress in our development efforts. Solid-state technology is the right path," says Dr. Mathias Pillin, who is responsible for Bosch's electromobility activities. The decision to purchase cells in future was the result of an intensive economic examination. The evaluation showed that the investment in industrialization of both advanced and future cell technologies was too risky. According to Bosch’s calculations, the initial investment in competitive and market-relevant cell production alone would have amounted to around $ 36 billion — a sum that would suffice to build up production capacities of around 200 gigawatt hours. This would correspond to a market share of 20 % and therefore a leading market position.
High Economic Risks
In addition to the high initial investment, the company’s management believes that additional operating costs would amount to billions of Euros. Furthermore, material costs would account for three quarters of the manufacturing costs. As a result, the competitive advantages gained by Bosch would make up only a small proportion of the added value created. According to Bosch, the dynamic and unpredictable external market factors made it impossible to say whether and when this investment would pay off. Such a risky investment was therefore not in the interest of the Group.
Bosch also emphasizes that from the company's point of view, the understanding of battery cells was decisive in order succeed in electromobility. According to this perspective, the company's own cell production is not required for achieving this goal. Bosch believes that it is well positioned in the market of electromobility, even without in-house cell production. “We want to be partner number one for electric drives," says Bulander. More than 800,000 vehicles with electric drive components from Bosch are already on the roads worldwide. The company announced, the technology and service provider has realized more than 30 series projects with established vehicle manufacturers and start-ups worldwide. Even in China, the largest and fastest growing market for electric cars, the company considers itself as the market leader.
This article was first published by Automobil Industrie. Executive editor: Christian Otto.
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