· 

China-Germany NEV cooperation urged as European battery consortium raises concerns

Will there be a head-on collision between Germany, a country known around the world for its rich heritage in the vehicle industry, and China, which has stood out in recent years in new-energy car technologies - or can there can be a win-win solution in this area? 

Domestic analysts are urging the latter option. They hope that Germany or other European countries that may see China as a potential industrial competitor should instead seek more cooperation with Chinese companies. 

Their suggestions come as the German government is coordinating efforts to form a multi-company consortium to explore production of electric car battery cells. According to a Reuters report in November, Berlin's push to shape industrial policy is part of European efforts to forge battery alliances to counter the dominance of Chinese, Japanese and South Korean producers.

In particular, China's rapid development in new-energy vehicle (NEV) manufacturing and related technologies is putting heavy pressure on European countries, which have lagged far behind in electric car battery research, experts said.

Asian countries now account for about 80 percent of the world's entire electric car battery production. China alone accounts for more than 60 percent, according to Liu Yong, Secretary General of the Energy Storage Application Branch, China Industrial Association of Power Sources, 

In comparison, the EU accounts for less than 5 percent of the world's electric car battery cell production.

 

Time to choose

Some of China's electric car battery cell manufacturers have also moved into the European market. For example, China's leading lithium-ion battery maker Contemporary Amperex Technology Ltd (CATL, picture of their HQ) has set up a plant in Germany that is expected to start production in 2021, according to materials CATL sent to the Global Times Wednesday. 

In mid-2018, Germany-based BMW awarded a contract worth over a billion euros (about $1.13 billion) to CATL, according to Reuters. CATL also has business connections with other German car producers like Daimler and Volkswagen. 

According to Liu, Germany's establishment of an NEV battery consortium might to some extent prompt German car producers to make fresh choices between Chinese and local suppliers, but they are likely to still tilt toward Chinese companies in the end. 

"For the orders German companies have signed with Chinese companies, they will stick to them out of business integrity. But what's more important, the EU companies have to establish a whole electric car battery production chain almost from nothing, from battery technology to talent to recycling.

"Meanwhile, China, Japan and South Korea have already mastered certain technologies and established rudimentary supporting industries," Liu said. 

The Global Times contacted several German carmakers including BMW on the consortium issue, but none was willing to comment.

 

Seek cooperation 

Germany's plan to build the battery consortium to fend off pressure from Chinese companies is one example of European countries' rising concern over Chinese companies' business competence. 

Another example is the merger proposal of Europe-based makers of rail equipment Alstom and Siemens, which would face down China's CRRC Corp, according to a recent AFP report. 

"Western countries have become complacent about a hierarchical business model where they possess the core technologies and assign low-end manufacturing missions to emerging markets. But in the past few years, with China rising on a wave of scientific research, this model is being challenged. This is making some Western countries uneasy," Zhao Junjie, a research fellow at the Chinese Academy of Social Sciences' Institute of European Studies, told the Global Times on Wednesday. 

But he suggested that European companies should not only view Chinese companies as potential threats but also as potential partners.

"For example, Chinese and European companies can share intellectual property rights in NEVs or jointly explore third-party markets in this area," he said. 

Chinese and European companies should also cooperate based on their competitive advantages. For example, they can cooperate in engineering projects, with China offering skilled workers while Germany providing project supervisors and specialized machinery that it is well-known for, Zhao suggested.