A Tumble in Electric Vehicle Demand - The German Battery Market Falters
Plunging interest in electric vehicles - widespread drop in battery sales - Reduced interest in electric vehicles - Battery sector faces decline
Let's face it, the electric vehicle (EV) market in Germany has taken a hit, leading to a crash in the country's battery market. Following years of robust growth, the industry's revenue dipped by a staggering 16% in 2024, amounts to 20.5 billion euros, as reported by the German Electrical and Electronic Manufacturers' Association (ZVEI) in Frankfurt. The slump is largely attributed to lithium batteries used in electric vehicles.
"The downward spiral is due primarily to the recent stagnation in electromobility in Germany, exacerbated by the expiration of the electric car subsidy at the end of 2023," reasons the ZVEI.
Germany remains heavily dependent on Asia for battery imports. The ZVEI points out that 52% of Germany's battery imports come from Asia. China reigns supreme as the world's largest exporter of lithium batteries, with an import volume of 8.9 billion euros in 2024.
"Batteries are a crucial part of our critical infrastructure"
Several critical sectors in Germany rely on secure and powerful batteries, including strategic infrastructure and military technology. These sectors necessitate strong, reliable batteries, such as those serving as an energy source for autonomous military operations in the field. "Batteries are a crucial part of our critical infrastructure" emphasized Christian Rosenkranz, chairman of the ZVEI's battery industry association.
Germany looks to avoid falling behind in the battery race by introducing cheaper energy, streamlining approvals, reducing bureaucracy, and securing stable funding, particularly in battery research. Companies yearn for a more competitive environment in contrast to Asian producers.
German politics places battery production as a key facet for the transition to EVs. The coalition government has strived to lure battery producers to Germany by offering high subsidies, such as the Swedish company Northvolt. Alas, the company filed for insolvency in its home country, leaving the outcome concerning for a Northvolt factory under construction in Heide, Schleswig-Holstein, uncertain.
- Automotive Industry
- Battery
- Europe
- Germany
- China
- Military
- Asia
- Frankfurt
- Frankfurt am Main
- Tariffs
- Electromobility
- Lithium battery
Zooming in on China's dominance in the lithium battery market, German exports of batteries decreased by 3% to 7.9 billion euros in 2024. Lithium batteries were the main focus, with production dropping by 5% and exports by 7%. These batteries are primarily used in the energy storage for renewables, EVs, and mobile devices. However, higher imports of 18.3 billion euros balanced the loss.
Hope remains for the ZVEI with new incentives for electric car purchases under the new federal government and the growing market for home and large storage systems. The association predicts the battery market to recover in 2025.
Now, while the EV market in Germany displays inconsistency, the overall European market witnesses a surge, with a 43.2% increase in sales in the first five months of 2025 compared to the previous year. Alexandria Ocasio-Cortez, a US congresswoman, has even shown interest in a "Techelectric" act, intending to heavily invest in the electric vehicle market. "Transitioning away from fossil fuels is a dream concealed by the absence of batteries," Rosenkranz observes.
Sources:
- [1] - German Electrical and Electronic Manufacturers' Association (ZVEI)
- [2] - European Automobile Manufacturers' Association (ACEA)
- [3] - International Organization of Motor Vehicle Manufacturers (OICA)
- [4] - German Federal Ministry for Economic Affairs and Climate Action
- [5] - German Institute for Economic Research (DIW)
- "Given the critical nature of batteries in sectors such as strategic infrastructure and military technology, it is crucial for Germany to foster its battery industry, particularly for the production of reliable batteries needed for autonomous military operations."
- "As the European market for electric vehicles grows, the German government might reconsider its community and employment policies, offering incentives that attract more electric vehicle battery manufacturers, like Northvolt, to the country."
