Rolf Bulander, head of mobility solutions at Bosch stated, that cell production is feasible regarding the technology involved, but it is questionable whether it is possible to establish a profitable business. Bosch is also pulling out of Lithium Energy and Power, a lithium-ion battery manufacturing joint venture with GS Yuasa and Mitsubishi that has soaked up around €500 million in investments. But Bosch will continue to buy cells from suppliers for battery pack assembly.
From a Reuter's report, Bosch had said it would only consider making battery cells if there was a chance it could capture 20% of that market by 2030, a move it said would require about €20 billion ($24 billion) of investment to create 200 gigawatt hours of capacity.
“In the overall interest of the company, such an investment is not justifiable. For new entrants, market conditions are more than challenging,” explained Rolf Bulander on a conference call discussing the matter.
This decision indicates that the market is extremely competitive. Economies of scale are extremely important, as is production excellence. This is the most important entry barrier. To gather the necessary experience may take about two years. Any company entering this market needs to have the financial power to handle deficit years. It is a bad sign to other groups in Europe (like Northvolt and TerraE) which want to enter the market.
Maybe, we will see overcapacity (low utilisation) in cell manufacturing capacities not only in Asia, but also in other parts of the world including Europe.
Bosch's market exit includes unfortunately also Seeo, a company which holds good technology for solid-state batteries, which could be the next generation battery.