Bosch abandons battery cell production but battery management system is the focus of R&D

Recently, the German auto parts giant Bosch announced that it has decided not to produce its own batteries. The reason is that investment risks are too high. "Considering the uncertainty of external market dynamics, it is unclear whether the investment in power battery production can bring returns," Bosch said in a statement.

â–  Abandon battery cell production but battery management system is the focus of R&D

"To become a major player in the field of electric mobility, we do not have to produce batteries ourselves," said Rolf Brand, head of mobile solutions at the Bosch Group, in a conference call.

In fact, Bosch also considered producing its own batteries to fight against Asian competitors. Last December, Bosch said that it is considering investing 20 billion euros, so that the battery capacity will reach 200GWh in 2030. If this happens, the group will be in the same echelon as Panasonic, LG Chem, Samsung SDI, and Ningde Power Battery suppliers. However, Bosch stressed at the time whether the investment depends on whether it can produce better and lower cost products than its competitors.

Now, Bosch believes that this investment is "high risk" and therefore decided to abandon the production plan, or even completely strip off the battery production related assets. Bosch decided to dissolve the two lithium-ion battery technology joint ventures - Lithium Energy and Power GmbH & Co. KG (LEAP) and sold its solid-state battery subsidiary Seeo, which it acquired in 2015. Despite these decisions, Bosch still said that it is optimistic about the prospects for solid-state batteries. "Technically, we have made great progress and solid-state battery technology is the way forward," said Marcel Spearlin, head of Bosch's electrification business.

Bosch also stressed that not producing battery cells does not mean completely abandoning the electrification, and the battery management system will remain the focus of Bosch R&D. Bland believes that Bosch has a strong battery management system technology and integration capabilities, coupled with the purchased battery unit, can provide customers with a complete battery system. Therefore, Bosch's plan is to continue to work with battery manufacturers to design batteries for hybrid and electric vehicles, which will then be produced by battery companies, and Bosch will purchase these batteries from them.

â–  too much technical uncertainty if the risk of investment production

In the booming global power battery industry, Bosch's decision appears "unique." As for the reasons, technology, cost, market, etc. must be carefully considered.

At present, most of the electric vehicles in the market have a driving range of 200 kilometers, which can meet the daily travel needs, but they cannot eliminate the “mileage anxiety” of consumers. In response to this, the research and development of power batteries continues to advance and new technologies emerge.

Bosch is optimistic about the development of solid-state batteries, but the relevant technologies are not yet mature. The market expects that its large-scale industrialization will probably take place around 2025. The amount of investment in battery production is huge. Once there are revolutionary innovations in technology, the investment in the early stage is likely to be overdone.

Brande pointed out that 75% of the cost of the battery unit comes from raw materials, plus processing, packaging, transportation and other expenses, and the profit margin is limited. Last year, the rising prices of raw materials for lithium batteries in the upper reaches of the market have caused many battery companies to suffer from headaches.

Another reason given by Brand for abandoning battery production is that currently in the global power battery market, Asian companies such as Ningde, Panasonic, Samsung SDI, LG Chemical, and BYD have become accustomed to occupy a large share. At the time of production, there are insufficient advantages and risks.

However, Bosch’s decision is not good news for European political circles and car manufacturers. They have been calling for companies to unite and establish a regional battery alliance to compete with Asian companies. Obviously, Bosch is not much interested in this. It is reported that although the European automotive industry is also actively developing new energy automotive technologies, there are no battery suppliers with strong capabilities. There is no significant advantage in terms of battery cells, and the battery cells are the key components of the battery, most of which are in Asia. Country or region manufacturing.

For Bosch's decision, foreign media have different opinions and they agree with all opponents. Among them, the technology media Electrek commented: “Disappointing. In order to speed up the promotion of electric vehicles, it is absolutely necessary to put the batteries into operation. Not only cars, but almost all of the vehicles in the future are changing to the direction of electrification. Tesla, Panasonic, Companies such as LG Chem, Samsung SDI, Ningde Times, and SK Innovation are major players, but I think that new players will still have enough space. Swedish startup Northvolt is a good example. Parts giant Bosch believes that the risk is too high. No matter what, others will think this is a great opportunity and they will lead the world in the transition to electric power transportation."

â–  Move to the travel market The goal is to achieve double-digit growth

In the list of top 100 auto parts suppliers released by the "Automotive News" of the United States, Bosch ranked first for five consecutive years. The data shows that Bosch has invested around 400 million euros each year to achieve a breakthrough in the field of electric mobility, most of which are used for battery technology research and development. But now, Bosch is obviously reluctant to spend too much energy on the battery. Smart network, autopilot, hydrogen fuel and other technologies have become its "new darling."

At the Bosch IoT Conference held at the end of February this year, the group announced the establishment of a new Internet mobile service unit focusing on car sharing, travel sharing and driver-related interconnection services. The chairman of the Bosch Group's Board of Directors, Volkermar Dunner, said that mobile Internet travel is Bosch's important business growth area and its goal is to achieve double-digit growth.

It is understood that Bosch is working with Daimler to launch fully autonomous driving and driverless systems for urban roads. The main goal of the project is to make automatic driving on urban roads a reality after 2020. Bosch has invested heavily in new technologies such as autonomous driving. In June last year, Bosch announced that it will invest EUR 1 billion in the construction of a semiconductor factory in Germany to meet the growing demand for high-tech chips such as automatic driving, Internet of Things and smart homes.

Dunner also revealed: "The fuel cell will play an important role in the powertrain system by 2030 at the latest. Bosch is speeding up the development process and gradually expanding its product portfolio."

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