Processes of embedding Chinese battery companies in Germany amidst sectoral transitions and political uncertainties

Abstract

Automotive production networks are currently undergoing processes of fundamental re-organization as new engine technologies and digital functions are being introduced in vehicles. In particular, the introduction of electric vehicles pressures incumbent industries, which have been established for over a century, to re-organize. The main system of a conventional vehicle, the combustion engine, is being gradually replaced by battery-powered electric engines, which puts complex incumbent production networks at risk of being redundant in the near future (Schwabe 2020). At the same time, new networks for the production and supply of vehicle batteries are being established.

These disruptive sectoral transitions are overlapped, initiated and influenced by macro-level dynamics like climate change, geopolitical tensions and unforeseeable crisis and shocks like the Covid19 pandemic (Gong et al. 2022). It is the interplay of these dynamics that influence the spatial and sectoral embeddedness of new production networks for battery production. They lead to ongoing shifts in power-relationships and spatial re-configurations between core- and peripheral regions. It is in particular Chinese battery suppliers which, strongly driven by industrial policy incentives, have established a dominant position in world battery production and sourcing of raw materials (Bridge and Faigen 2022).

This presentation explores processes of embedding Chinese companies in networks for battery production in Germany, as well as the interplay and implications of macro-level dynamics which shape such processes. A particular focus lies on the interplay of policy initiatives (such as rules for sustainable production, and incentives for localization), uncertainties (such as the discussions about “de-coupling” between Germany and China) and risks of raw material supply. These forces influence firm-level decision-making regarding the choice of location, organizational structure and, eventually, the spatial configurations of battery supply by Chinese companies in Germany. The presentation draws on the concepts of global production networks (Coe and Yeung 2015) and attempts to contribute to the conceptualization of the interplay of the macro-level dynamics outlined by Gong et al. (2022) through the case study, based presentation of Chinese battery companies as they establish presences in Germany.

This study is part of the DFG-project “Transitions of Chinese-German business linkages amidst technical paradigm change in the automotive industry”, which investigates the re-alignment of automotive production networks for new core components and the positioning of Chinese and German companies in them. In various articles, the Chinese-German business linkages in the battery production as well as digital functions (such as GPS-services, infotainment and automatic driving) are explored.