BASF splurges on battery materials
B ASF
SE is prepared to dig deep, pouring money and expertise into developing materials for electric-vehicle batteries to catch up with rivals like Tesla Inc supplier Sumitomo Metals & Mining Co Ltd.
“The world’s No. 1 chemical maker is adding to its expansion plans in Europe, which is emerging as the next high-growth region for batteries,’’ said Ken Lane, BASF’s global head of catalysts.
Battery makers in the market currently rely on Asian suppliers like Sumitomo that provide nickel and lithium.
“We are the largest chemical supplier to the automotive industry, and this is the biggest opportunity that we see in that space today,” Lane said in a phone interview.
“Asia has been the growth story till now and will continue to grow, but Europe is also going to be growing very fast over the next decade.”
The Ludwigshafen, Germany-based company plans to build a €400 million ($488 million) factory in Europe to make cathodes from a concoction of elements that determine the battery’s strength and lifespan.
Work has yet to begin on the plant, but BASF is already looking ahead to additional projects.
The splurge is part of an arms race to scale up output of cathodes to meet demand at a reasonable cost.
Johnson Matthey Plc, a British multinational speciality chemicals and sustainable technologies company, is investing as much as $270 million, and Belgium’s Umicore SA is spending more than $350 million on its South Korean operation as it seeks to stay ahead of the competition.
“BASF will position itself with assets in Europe,’’ Lane said, declining to give details.
“As well as increasing capacity to deal with a ramp-up in electric-vehicle production, having operations on the ground helps attract and retain the scientists needed, which is currently very difficult,” he said.
Suppliers and carmakers alike are honing plans to meet stringent emission regulations in Europe that have triggered record spending to develop battery-powered model lineups.
The shift to electric vehicles has been a learning curve for parts makers and auto companies alike, which have struggled with the high cost of batteries and unattractive products failing to rouse much of a consumer response.
BASF bought patents and battery material technology in 2008 and opted to largely focus on cathodes, the key battleground for battery performance.
Amid hype over different types of chemistry, coupled with lofty ideals for an electric car that recharges in the time it takes to drink a cup of coffee, BASF spent its first years “feeling its way,” said Lane.
Later, a partnership with TODA Battery Materials gave it vital manufacturing knowledge and a more solid footing to compete with Nichia Corp, China’s Ningbo Shanshan Co Ltd, Umicore and LG Chemical Ltd.
Global sales of battery vehicles — both plug-in hybrids and wholly electric cars — are expected to reach eight million units in 2025, up from about one million in 2017, according to Liberum analyst Adam Collins.
While most carmakers plan to introduce electric models from next year, moves for a battery-cell industry in Europe have remained vague amid previous failed attempts.
Evonik Industries AG, the specialty chemical maker, exited its battery venture Li-Tec in 2014, selling its stake to Daimler AG.
Demand for electric vehicle demand wasn’t sufficient and keeping up with the industry’s rapid development carried too much risk, the company said at the time. Daimler ceased making cells a year later. “It’s the chicken-and-egg thing here,” said Lane. “If you don’t have the materials, you’re not going to have the batteries.”
BASF hopes decades of experience with precious metals, key to catalysts used in combustion engines and petrochemical plants, will help make its push successful.