Car Industry

German government to subsidize EV battery development for VW, BMW, report says

The German government wants to help jump-start battery development to keep up with Asia.

Most German companies source their Li-ion batteries from Asia, but the German government hopes to change that.

Volkswagen

Back in 2018, the German government announced that it would be subsidizing the local production of lithium-ion batteries in an effort to keep up with production from countries in Asia.

Upwards of 30 companies have applied for the subsidy including BMW and battery manufacturer Varta. Now though, Volkswagen has opted to join the crowd according to a report published Monday by Reuters.

"Volkswagen group wants to take part in Economy Minister Altmaier's initiative support the industrial production of mobile and static batteries," said Volkswagen representatives, in a statement.

Part of the reason that Germany is late to the lithium-ion party is that high labor costs drove up the price of development significantly. This prohibitively high cost actually forced Daimler's battery-producing subsidiary Li-Tec to shut its doors back in 2015.

In addition to this subsidy for Li-ion batteries, the German government has set aside the equivalent of $1.2 billion to help fund the domestic development of solid-state battery tech as a way to offset a potential loss of jobs as internal combustion engines become less desirable.

The German program is part of a larger European Union initiative to decrease battery cell dependence on Asia, with the end goal being that the EU and its members hold a 30 percent market share of global lithium-ion battery cell production.