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Porsche Consulting, VDMA study says battery gigafactory buildout unique opportunity for Europe’s mechanical engineering industry, if it can collaborate

More than 200 battery factories are to be built worldwide over the coming ten years, most of them in Europe; production technology worth billions is needed for each of these factories. This marks an historic growth opportunity for German and European mechanical and plant engineering firms, according to a new study by Porsche Consulting in cooperation with the VDMA.

At the moment, battery factories are primarily equipped with production technology from Asia. Chinese mechanical engineering companies are currently setting the standard as complete suppliers. Only 8% of the high-tech equipment for such factories comes from Europe. This proportion is too low to have a significant influence on technical development and to create a second cluster for battery technology that is based in Europe. This would require a permanent market share of about 20%, according to the study.

The crucial question is whether a second battery cluster will arise outside Asia. Currently, Asia holds a 92% market share in battery manufacturing equipment, while Europe only has 8%, meaning that Asian companies define the industry standard. To grow to 20% market share—which is a precondition for a second, viable cluster—European and North American manufacturers, equipment suppliers and public entities need to come together and collaborate. Failing that, Asia will strengthen its lead and stay beyond 90% equipment market share, preventing a second cluster from forming.

The study examines solutions to prevent technological dependency in this field that is so crucial for the future. After analysis of the technology and providers, forecasts based on their own market models and a series of interviews with market participants, the study partnerssaid it is clear that the cooperation of the parties involved plays a decisive role.

Only if European mechanical engineering firms succeed in jointly offering integrated factory solutions will they be able to hold their own against the competition from Asia. Technologically, European industry is on an equal footing, but companies from China are already offering turnkey battery plants.

—Gregor Grandl, Senior Partner at Porsche Consulting and co-author of the study

This reduces interfaces and thus the time and financial risk during construction.

The opportunities for mechanical engineering companies are huge: In order to maintain a market share of just 8% in the battery market during a rapid ramp-up, growth rates of 33% per year would be necessary. To reach a 20% market share, companies would have to grow faster than the market. A roughly 50% increase in sales per year would be necessary—and possible.

The market volume for machinery and plant manufacturers in the battery sector alone is €300 billion in the period to 2030. Success in this competitive environment would secure Europe permanent access to the important future technology of batteries and create many jobs in the process.

The VDMA represents more than 3,600 German and European companies in the mechanical and plant engineering industry. The companies employ a total of around three million people in the EU-27, including more than 1.2 million in Germany alone. This makes mechanical and plant engineering the largest employer among the capital goods industries, both in the EU-27 and in Germany. It represents an estimated turnover of around €860 billion in the European Union. Some 80% of the machines sold in the EU come from a manufacturing facility in the internal market.

VDMA Robotics + Automation represents one of the most dynamic and fastest-growing sub-sectors of mechanical engineering. It encompasses the three specialist groups of robotics, machine vision, and integrated assembly solutions. Its 400 member companies are manufacturers of assembly and handling technology, machine vision, and robotics.

VDMA Battery Production brings together 170 member companies working on the production technology of all types of batteries, with a current focus on lithium-ion technology.

The member companies supply machines, systems, components, tools, and services along the entire process chain of battery production: from raw material preparation to electrodes, electrode production and cell assembly to module and pack production.


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