"If the Green Deal comes, we will need40 large battery factories...

"If the Green Deal comes, we will need40 large battery factories in Europe" Volkswagen boss Herbert Diess triesto convince German companies to get started with battery cell production. In aninterview, he explains what it is all about.

WirtschaftsWoche: Mr. Diess, why are the Chineseand Americans building huge battery factories in Germany, but not Germanindustry?

Herbert Diess: A good question. I have talked toeveryone in Germany, but they have declined. And so the Swedish companyNorthvolt will set up a battery factory in Germany together with Volkswagen.

Who let them down, the car manufacturers or thesuppliers?

The automakers are of little help at this point.The batteries are typically supplier products. I've talked to major suppliers.

Do you think that the suppliers will move againwhen they see the acceleration through the Green Deal and the good sales figuresfor electric cars?

It can be worth it. I spoke to the head of CATL forthe first time about ten years ago and asked him if he could imagine makingbatteries for cars. At that time, CATL produced batteries for smartphones. Atfirst he declined because he thought he couldn't build batteries that big. Butthen he did it. Today CATL is not only the largest, but also the mostinnovative battery manufacturer in the world. I have always assumed that in afew years an industry will emerge for batteries with as much sales as the totalof the suppliers. The fear of low margins has not come true either. Theoperating margin at CATL is in the double-digit range.

Do you make another attempt to convince the Germansuppliers? I am always in conversation with the German suppliers. Manysuppliers feel it is too late to get started. I am convinced of the opposite.We are still at the very beginning of the development. If the EU's Green Dealgoes as it is, the battery factories announced so far in Europe will only coveraround five to ten percent of demand. If the Green Deal comes, we will need 40large battery factories in Europe. Nevertheless, the question remains whetherthe German suppliers would even be able to build such battery factories. Theylack the experience of a CATL. Volkswagen is building a battery factory inSalzgitter together with the Swedish company Northvolt. This is an innovative,young and still relatively small company. Building the planned plant in Swedenand ours here in Germany is a big challenge. That would be a manageable taskfor the large German suppliers. Also for the classic system builder. It's aboutmechanical engineering, process engineering, chemistry. All things that Germancompanies have mastered. Instead, we prefer to discuss synthetic fuels ...

.. so new, climate-friendly fuels for combustion engines. Many in Germany see this as an alternative to the electric car, including Friedrich Merz from the CDU, for example. Is he wrong?

The production of synthetic fuels uses large amounts of electricity. A car with synthetic fuels needs five to six times more electricity than an electric car over the same distance. Therefore, the technology is ideally suited for niche applications. If you still want to drive your internal combustion Porsche 911 in 2030, you can fill up with synthetic fuel for five euros per liter. But for the masses that is unthinkable from an economic point of view alone. The subject is through. Everyone knows that the climate targets in the coming years can only be achieved with the electric car.

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