Expert: VARTA break-up would be 'a blow' to German battery industry

Battery expert Dirk Uwe Sauer sees the impending break-up of the German battery manufacturer VARTA as a problem for the entire industry in the country.

A creditor group led by Deutsche Bank and the financial investors RBC BlueBay, Blantyre and Whitebox announced earlier this week that it intends to spin off the well-known household battery business from the VARTA Group, blaming the company's strained financial situation.

On Friday, VARTA confirmed it had filed for preliminary insolvency under self-administration, in a bid to secure its economic future.

"There are only a few companies like VARTA in Germany," said Sauer, a professor at RWTH Aachen University.

"If the company's profit centre is carved out, the question is how future innovation will be financed," he said.

VARTA said the insolvency filing was intended to enable the sustainable continuation of its business operations.

"Technologically speaking, what VARTA does is very good," said Sauer. Ultimately, however, it all comes down to price.

That, he argued, reflects a broader challenge facing Germany's battery industry.

"We don't have large-scale manufacturing," Sauer said. By contrast, China has built up massive production capacity, triggering intense price competition.

"We've known for a long time that we're heading into this dilemma of dependence on China," he said.

Sauer nevertheless sees promise in VARTA's work on sodium-ion batteries, an emerging technology that could help Europe diversify its battery supply chain.

"Sodium-ion batteries represent a real opportunity for Europe to reduce its dependence on China, because the raw materials required for them are more readily available on the global market," said Sauer.