Dailmer moves to join EV charge, $23 Billion Investment Planned for Battery Cells

Daimler AG, the parent company of Mercedes-Benz has revealed plans to buy $23 billion worth of battery cells by 2030, as it prepares to bring dozens of electric and hybrid vehicles to the market. The $22.8 billion budget for Li-ion batteries is a part of the firm’s multi-billion effort to launch 130 electric and hybrid vehicles by 2022. For context, the firm closed 2017 with $200 billion in revenues.

Dieter Zetsche, Chairman, Daimler AG and Head of Mercedes-Benz Cars, said while making the announcement, “Our electric offensive continues to gain momentum. After investing billions of euros in the development of the electric fleet and the expansion of our global battery network, we are now taking the next step. With the purchase of battery cells for more than 20 billion euros, we are systematically pushing forward with the transformation into the electric future of our company. We plan a total of 130 electrified variants at Mercedes-Benz Cars by 2022. In addition, we will have electric vans, buses, and trucks.”

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The German automobile major has, however, declined to comment on which companies have been selected to supply the batteries. However, they did comment that the suppliers are already producing battery cells in Asia and Europe and are continuing to expand in Europe and additionally in the USA. Daimler does at present, have supply deals with LG Chem and SK Innovation, as well as China’s CATL.

The company has in fact been on an electric mobility climb for a few years now, an effort which includes the development of a heavy-duty electric truck, plans of $1.2 billion global battery production wing, and an investment in electric charging company ChargePoint. According to preliminary reports, the global battery production network for Mercedes-Benz will span over 8 factories in three continents. The first of which is already in series production in Kamenz, Germany and the second ready to begin production early next year. Besides this, two more factories will be built in Germany, as well as in Beijing, Bangkok and in Tuscaloosa, Alabama.

The global supply of lithium-ion battery cells will come under increasing pressure as electric vehicles move into the mainstream. That expectation is what drove Tesla to build its massive battery production factory, called the Gigafactory, near Vegas.

Wilko Stark, Member of the Divisional Board Mercedes-Benz Cars, Procurement and Supplier Quality, added, “With extensive orders for battery cells until the year 2030, we set another important milestone for the electrification of our future electric vehicles of the EQ product and technology brand. In this way, together with our partners, we ensure the supply of our global battery production network today and in the future using the latest technologies.”

We expect these numbers to be ramped up significantly by 2025, depending on how the market evolves from here on. Much like solar power, the EV market is also moving away from subsidies and needs to stand up on its own commercially. That is a scenario market participants expect to see only by 2022 or thereabouts, when battery costs are expected to drop significantly from present levels. It is also one reason that brands like Daimler and Audi are making bigger plans, as between now and 2022, they are likely to feel the heat far more from EV players, as most are forced to target the premium segment due to costs.