Build next generation of batteries or lose jobs, auto executives tell Europe

Europe shouldn’t rush to abandon the combustion engine but it must also build up its own production of electric car batteries to compete with China, auto suppliers and manufacturers said at the Frankfurt Motor Show, which opened on Tuesday in Germany.

Britain and France have announced plans to phase out internal combustion engines to cut pollution.

Roberto Vavassori, president of the European Association of Automotive Suppliers (CLEPA), warned that a headlong rush to electric cars would hand business to China, which along with South Korea and Japan dominate battery production for such vehicles.

“We need to provide a sensible transition period that doesn’t give unwanted gifts to our Chinese friends,” he said, estimating European automakers are paying 4,000 euros ($4,756) to 7,000 euros to China for batteries for every electric car.

Vavassori called for a European drive to develop the next generation of battery cells. He said automakers and politicians should look at other ways of cutting vehicle emissions as well, such as more efficient engines and synthetic fuels.

Germany’s auto giants Daimler and Volkswagen both announced plans on the eve of the Frankfurt show to accelerate their shift to electric cars.

“For the initial phase, I still feel in good hands with the Korean suppliers, but I would appreciate it if competition were to grow and a European consortium would emerge,” said Herbert Diess, brand chief executive of Volkswagen.

Trade unions have been putting pressure on manufacturers to make electric cars in existing factories and invest in battery production in Europe, rather than outsourcing the work to Asia.

“Self-contained value chains are a central pillar of our industrial model and play a big role in the success of the German economy,” Joerg Hofmann, president of the IG Metall union, said on Wednesday.

CLEPA’s Vavassori said Europe was lagging behind in the production of sensors and microchips, as well as batteries, and there was a risk in relying on Chinese supplies given geopolitical instability.

“We need production in Europe for vehicles of the future, or we put all Europe at risk,” he said.

Many in the car industry want governments to focus on setting targets to bring down carbon dioxide emissions, rather being prescriptive about quotas for electric cars.

“Mandating certain percentages of certain technologies doesn’t take us to the best solution,” said Daimler Chairman Dieter Zetsche.