Sonnen brings manufacturing back to Adelaide with factory opening

Manufacturing has returned to the heart of Adelaide's north with German battery giant Sonnen opening its new factory at the old Holden plant.

The first batteries have begun being assembled at the facility, more than 12 months after car production ceased.

Sonnen says it has already employed 50 full-time workers in Adelaide but that number is expected to grow to more than 400 by the end of next year.

Premier Steven Marshall says it is providing new opportunities to those left without work following the Holden closure.

"It will create hundreds of new jobs - 430 jobs will be created here in South Australia for manufacturing and installation," he said.

"Already many of the employees employed by Sonnen come from the original GM business which was also on this site.

"In fact there are 14 GM employees re-employed back in Sonnen's operations here in Elizabeth."

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In the coming weeks, additional machinery and parts will arrive at the Elizabeth plant to eventually build 50,000 energy storage systems over five years, including those used for the state's $100 million home battery scheme.

"This corresponds more or less to the capacity we have also in our German headquarter plant and two times more than we are currently producing in our Atlanta, Georgia, plant," Sonnen CEO Christoph Ostermann said.

Last year Chinese makers claimed seven of the top 10 slots on the list of the world's largest suppliers of lithium-ion batteries for EVs, according to Chinese research company Gaogong Industry Research Institute. BYD ranked third globally, after Panasonic -- which produces batteries for Tesla -- and China's Contemporary Amperex Technology Ltd., or CATL, the world's top EV battery manufacturer.

According to projections by Bloomberg New Energy Finance, China will produce 70% of the world's electric-vehicle batteries by 2021. The potential rewards are huge: Goldman Sachs estimates that sales of batteries to power cars will rise from under $10 billion to $60 billion by 2030, driven by a global push to reduce greenhouse gases.

China is already the world's largest market for electric vehicles, and its leap to the top of EV battery manufacturing has sent shock waves to rivals around the world. The Japanese and South Korean companies that took an early lead in the development of EV battery technology are scrambling to ramp up production. The Europeans are belatedly trying to get into the game, launching the European Battery Alliance only last year.

And industry analysts warn that China's dominance of the EV battery business could place established automakers at a disadvantage as they seek a foothold in the still-nascent market for electric cars.


Workers produce lithium batteries at a CATL factory in Ningde, China. The battery maker has big plans to ramp up production.   © AP
"A situation where Chinese battery manufacturers dominate the market is not good for carmakers from Japan, the U.S., Europe and South Korea," said Takaki Nakanishi, CEO of the Nakanishi Research Institute. "Generally speaking, there is a risk if carmakers depend too much on any single market for procuring components."

To some industry observers, what is happening in the EV battery market appears to be a replay of China's use of fat subsidies to push foreign competitors out of the markets for solar panels and consumer IT products.

There is little doubt that the breakneck growth of Chinese battery makers like BYD and CATL has been powered by the government's vigorous policy support. Beijing kept the Chinese market closed to foreign companies while promoting EVs with massive state subsidies to buyers.


"The Chinese government installed a controversial 'whitelist,' which encourages carmakers to procure batteries from the Chinese makers on the list," Nakanishi said.

But the government's efforts have also led to a proliferation of battery manufacturers and a glut of production capacity.

In response, the Chinese government is taking steps to thin out the overcrowded industry by shifting the focus from quantity to quality. Earlier this year, the government started tightening the criteria for state subsidies to promote EV sales. It has stopped providing financial support for purchases of low-performance EVs with short ranges. And it is also easing the restrictions on market access by foreign makers.

Tang Jin, a senior researcher following China's auto market for Mizuho Bank, predicts that stiffer competition in the country's EV battery market will trigger a major shakeout among local makers. "There are some 60 Chinese makers of lithium-ion batteries now, but only about 20 of them will still be around five years down the road," Tang says. ...

This manufacturing will last only as long as government subsidies last.

The average and minimum wage in Sonnen's home base Germany is lower than that in Australia.

Protected manufacturing will not survive against international competition.

China is an even cheaper source for batteries.

Australian battery production is a tiny piss in a huge ocean.

https://asia.nikkei.com/Spotlight/Cover-Story/Battery-wars-Japan-and-South-Korea...

lee wrote on Nov 28^th, 2018 at 12:06pm:


Owned by a german company. Nothing is truly aussie anymore

Spot

lee wrote on Nov 28^th, 2018 at 12:06pm:


Owned by a german company. Nothing is truly aussie anymore

Spot

The world is evolving and Australia is not.

Germany is short of skilled labor and they are using Australians as a temporary resource until they install robots and exhaust all government subsidies.

This venture will eventually die because there appears to be no economic rationality other than the government subsidies.

Sonnen will walk away with bags of government cash and will probably profit from the eventual sale of industrial facilities to some other entity created to take advantage of free government money when Sonnen's cash cow has run dry.

TheFunPolice wrote on Nov 29^th, 2018 at 2:55pm:


The third world?

Factories like this are normally established in Asia.