GERMANY has earmarked 1 billion euros (US$1.2 billion) to support a consortium looking to produce electric car battery cells and plans to fund a research facility to develop next-generation solid-state batteries, three sources said.

The measures, expected to be announced this week, are designed to reduce the dependence of German carmakers on Asian electric vehicle (EV) battery suppliers and protect German jobs at risk from the shift away from combustion engines.

Berlin’s push to shape industrial policy marks a break with its generally “hands off” approach to business decisions and is part of European efforts to forge battery alliances to counter the dominance of Chinese, Japanese and Korean firms.

Ensuring local companies are involved throughout the electric vehicle supply chain is particularly important for Germany as it has become so economically dependent on the success of its car industry.

But Germany’s car battery push could be too late. Asian market leaders are ramping up output and some experts say there’s a risk of a glut that could hinder the establishment of large-scale battery cell production by European newcomers.

For Chancellor Angela Merkel’s fractious ruling coalition, the plan is also a way to show voters ahead of three elections next year in eastern Germany that it can get its act together to help Europe’s largest economy thrive in the electric car era.

“We have a concentration of risk in the automobile sector. The industry is too dependent on the combustion engine,” Deputy Economy Minister Christian Hirte said. “The government therefore wants to help the sector in its efforts to diversify.”

Hirte said Berlin was in talks with several companies and other governments in Europe to support a battery cell factory.

(SD-Agencies)