The current federal budget includes a drastic cut in battery research funding. EAS Managing Director Michael Deutmeyer classifies the effects on German industry, points out the consequences and ways forward for medium-sized companies like EAS and outlines possible solutions for a new, future-proof model of battery technology research and development in Germany:
Mr Deutmeyer, how do you rate the cuts in federal research funding in the field of battery technology?
“It is frightening to realise how little foresight is being shown at a political level with regard to the importance of lithium-ion technology. The automotive industry sector in particular is extremely relevant for Germany and is in the midst of electrification. Dependence on Asian cell manufacturers is jeopardising European car manufacturers. It is vital for our country to establish competitive European mass cell production before the industrial policy pricing of Asian cells threatens European car manufacturers.”
How competitive is the German battery industry currently?
“Germany has caught up considerably in recent years and has managed to industrialise many technologies in the field of lithium-ion applications. We are now one of the leaders in Europe in terms of battery technology. We are also ahead of Asian products in terms of certain technical cell specifications. Automotive battery cells differ in terms of fast-charging capability, safety, cycle stability and, of course, CO2 footprint and recyclability. The aim must therefore be to establish a commercially successful mass production for the specified cells that matches the quality and cost structure of the Asian competitors. To destroy this opportunity now by slowing down research and development is irresponsible for Germany as an industrial hub.”
What is the function of technical universities in this development?
“Research and teaching have various functions for our industry. On the one hand, universities train specialists who can be taken on by the industry. On the other hand, the experts at the scientific institutes drive the development of technologies, which then transfer to the industry together with the corresponding expertise. The latter is achieved through co-operation in joint research projects. The financial support for these projects lowers the threshold for companies to invest in new storage technology ideas. This means that more of these ideas are tackled, tested and ultimately developed to market maturity. At the same time, the research funds finance automotive-related professorships, doctoral positions and the corresponding research infrastructure. Small and medium-sized companies can hardly compensate for the loss of this funding.”
How does the lack of funding affect the shortage of skilled workers?
“Industry needs skilled labour to be able to develop and produce. These skilled workers are recruited at universities. There they generate expertise and skills that are of interest to industry. When the federal government cuts funding, this initially has a positive effect in terms of the shortage of skilled labour in industry. Many doctoral students and graduates, who would normally have planned a further career stage at university or in one of the research projects, now will have to apply directly to the market. This means that more of the urgently needed skilled labour is available to companies. However, this is only a very short-term effect, as the specialists of the future must also be trained at universities and in the projects. A reduction in research funding beyond the current budget would reduce the number of specialised training courses, lower their quality and presumably also very quickly lead to a brain drain abroad.”
What does the limited research funding mean for EAS?
“EAS has a few vacancies to fill. We are therefore benefiting from the short-term effect, which is now flushing young electrochemists and battery designers onto the market who would otherwise have chosen a university career. However, the positive effects for us are already limited to this. For example, we operate in the business field of licence models. This means that we patent new cell technology processes and licence them to the industry. The success of this business area depends on us constantly applying for new patents. Most of these arise in the R&D projects that are usually subsidised. Funding is therefore essential for this area. At the moment, EAS is still involved in ongoing projects, but the probability that we will start new projects this year where we have a need for research is extremely low.”
What does this mean in terms of numbers?
“It's impossible to quantify the losses we incur due to the lack of research funding. In qualitative terms, the lack of support means that we are less able to develop and patent future-proof technologies. Research projects also bring in expertise and keep us able to act when partial problems need to be solved. This will be reduced without the funding. We will be able less to network and exchange ideas, benefit less from cross-connections and follow-up orders and recruit fewer good personnel in the long term. It is obvious that we will not be able to compensate for this loss from our cash flow.”
How will EAS deal with this situation in concrete terms?
“To ensure that our patent portfolio can continue to grow in line with our market value, we will look at which other countries can support our topics with funding. There are funding programmes in the USA, Canada and Europe that are also interested in our technological issues. Unfortunately, international cooperation - including at EU level - is usually relatively inefficient and involves additional expenditure. It also bears the risk of know-how migrating and being spread more widely. Nevertheless, we are increasingly being approached by potential partners from abroad and are now following this with greater interest. We are already involved in several international co-operations. We now need to strengthen this.”
How will applied research in Germany develop in the meantime?
“We have a completely new situation here in the field of battery technology research and development. Fortunately, it offers opportunities for a fundamental improvement. Up to now, the scientific research activities of universities have been funded one hundred per cent. The development contribution of companies, on the other hand, was only supported with up to fifty per cent of the costs. As a result, the initiative and planning of the projects generally came from the scientific institutes. The companies, on the other hand, had little room for manoeuvre - both in terms of the precise technological objectives and in the processes and scheduling of the projects. Now the research institutions are forced to place their technological goals bilaterally and to win over companies for their funding. This means that they are also subject to the mechanisms of the market economy and must offer an appropriate price-performance ratio and a targeted solution to an existing technological problem if they want to realise their research objectives. They will therefore have to work faster, more cost-effectively and in a more targeted manner. This could be the beginning of a completely new and better research system for the commercialisation of technologies in Germany.”
How exactly is this idea for a better research system shaped?
“First and foremost, it is characterised by efficiency. If companies can exert more influence on the consortium, it will certainly be smaller. Administrative procedures will be limited to the bare essentials, processes will be streamlined and accelerated. And much more importantly, the focus will no longer be on the ideas and interests of university research, but on the specific need for solutions from the market. Efficiency will set the cumbersome apparatus of research institutions in Germany in motion in such a way that it approaches solution ideas in a results-orientated and correspondingly flexible manner. The company-led research consortia can offer targeted support and answer industry's questions much more quickly than in the three or four years of subsidised research projects that have been the norm to date. And if the financial outlay is too high for a single company or a small number of participating companies, creative co-financing models are also conceivable. For example, manufacturers of production machines could contribute financially to the solution of a problem and in return receive a free or particularly favourable licence for the new technology.”
You think we won't need research funding in the future?
“Yes, of course we do. We need a tenfold increase in research budgets to drive forward Germany as a battery location, including the energy transition. However, it would be desirable for companies to receive the research funding and use it to commission the development of new technologies in the network. Not only would the processes, time frames and frequency of milestones be planned much more efficiently. The research objectives, if they are result-oriented and field-driven, would also lead to greater competition. This would enable research and development to make significantly faster progress and consequently be able to settle accounts more quickly. The funding organisations could support this effect by switching to results-driven project management. They could play a much more active role as a third instance - also in terms of content. In their role, they have an eye on the research landscape. They could create cross-links to other projects and form combined funding systems in research clusters. This would enable significantly more output from the financial resources invested. We would drive forward the key technology of the energy transition much faster and position Germany as an industrial centre for the future.”