Industry Trend Analysis - Autos Investment Round-Up: Germany Steps Up As Investment Goes High-Tech - MAR 2018

BMI View: The majority of investment projects in Western Europe over the last quarter are aimed at value-added high-tech manufacturing. Germany stands out for several projects as the national industry faces up to the charges levelled against it in the general election that it has fallen behind in the innovation stakes.

In BMI's regular round-up of production investments, we track the latest projects from the production side of the industry and analyse regional trends that we see developing. In doing so, we hope to build a picture of any potential hubs that may be developing, as well as company strategy in terms of production bases and export programmes.

Western Europe Autos Production Investment
Date Announced Country City/ State/ Region Company Value Brief Description Date Onstream
na = not available. Source: BMI
Oct-17 Spain Valladolid Renault EUR600m Production of a new car with a new aluminium engine block casting facility 2017
Oct-17 France Lyon Saint Jean Industries EUR45m New equipment and RDI in the production of smart, low-emission cars 2019
Oct-17 Sweden Skelleftea ABB and Northvolt USD11.8m
(1st phase)
Construction of battery factory to rival Tesla's Gigafactory with ABB investing in the first phase 2020
Nov-17 Germany Leipzig Schaeffler USD209m Build an assembly and packaging center to supply auto spare parts and tools to warehouses across Europe late 2019
Nov-17 Spain Valencia Ford USD885m Production of new Kuga SUV 2018
Nov-17 Germany Zwickau VW USD1bn Upgrade of property, plants and equipment for the electrification and hybridisation of all Group models 2022
Nov-17 Germany Munich Osram Continental GmbH na A joint venture to develop lighting products for the automotive industry 2018
Nov-17 Germany Munich BMW USD237m Construction of a new battery cell center 2022
Nov-17 UK West Midlands UK Gov USD107m New automotive battery development facility na
Dec-17 France Dieppe Renault USD42m Revival of the Alpine sports car brand with a capacity of 6,000 units a year 2017
Dec-17 France Paris PSA and Nidec USD261m Joint venture to produce electric motors with an annual capacity of 900,000 units 2022

In Q417 we identified 11 new autos manufacturing projects announced or inaugurated in Western Europe, worth a combined total of USD3.5bn (for those projects providing financial details). While this is slightly down on the 16 projects tracked in the same period of 2016, the value is considerably higher and points to one of the key trends in the region. Carmakers and suppliers are investing in value-added high technology manufacturing in the developed European states, which ensures these countries do not entirely lose out to their more competitive emerging counterparts.

Electrification Dominates

The trend of investment in electric vehicles (EV) and related technology continues from our last round-up ( see ' Autos Investment Round-Up: Boom Time For Future Tech In Europe ' , August 9 2017). In this round-up, battery facilities are particularly prominent, with BMW announcing a fuel cell facility in Munich, ABB planning a battery factory to rival Tesla's 'Gigafactory', and the UK government choosing a site in the West Midlands for a battery development facility. This underlines the importance of batteries as a new commodity in the push towards EV adoption and as all the major European carmakers have announced electrification plans, it is not surprising to see these facilities appearing.

We highlight, however, that despite the value-added nature of these projects, this is an area where an increasingly mature Emerging Europe manufacturing base can provide competition, with a growing number of battery plants in Central and Eastern European markets ( see ' CEE Production Base Is Maturing ' , January 15). However, an interesting note for full electric motor production is that Groupe PSA, which is making more of a push into emerging markets overall, has chosen to stay in France, entering into a joint venture with Nidec.

Germany Heeds Call For Innovation

Four of the listed projects are in Germany and include the BMW battery facility mentioned above and Volkswagen's groupwide electrification of its model line-up, for which it has allocated EUR1bn to its Zwickau plant. This aligns with a view we put forwards prior to the German general election, which is that the industry would be forced to step up in terms of its innovation. It was an argument from both major candidates in the run-up to the election that the German auto industry has been left behind ( see 'German Election: Merkel Victory Will Force Industry Innovation', August 23 2017).

While not related to EVs, the Osram-Continental joint venture also follows the innovation theme, with the company dedicated to finding 'intelligent lighting' solutions. The partners plan to combine lighting technology with software, electronics and sensor technology for intelligent automotive lighting, which they say they can tailor to the design needs of their carmaker clients.