Problems mounting for Daimler battery supplier Farasis

Daimler’s partnership with the Chinese battery cell manufacturer Farasis Energy is in danger of collapsing, according to a media report. Since Farasis was firmly planned as a supplier in the manufacturer’s electrification offensive, this could have a sensitive impact on the Stuttgart-based company’s plans.

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The Stuttgart-based group had initially entered into a sustainability partnership with Farasis Energy in 2019, and in July 2020 Daimler also took a financial stake in the Chinese battery cell manufacturer. As Manager Magazin now reports, alarm bells are apparently ringing in Stuttgart regarding the Chinese partner.

As the magazine reports without naming sources, Farasis is said to still not have a building permit for its planned plant in Bitterfeld, Germany. In addition, the first cell samples had been “catastrophic.” Daimler is said to be talking about “considerable problems,” and even a complete failure of the cooperation is not ruled out. Farasis is said to have promised cell substitutes from China during the talks. The report does not say what Daimler’s position is on this proposal. The Stuttgart-based company has so far always stressed that local battery production is an important success factor.

Since Farasis should supply about half of the cells Mercedes needs in Europe in the medium term, this would have a significant impact on the Stuttgart company’s planned procurement. Just last week, there were reports that Daimler CEO Ola Källenius was running through scenarios that would see the manufacturer phase out internal combustion engines well before the previously communicated 2039 target. However, Daimler naturally needs a secure battery supply for this, and Farasis was planned as a cornerstone here.

If the cell samples are indeed “catastrophic” at the end of 2020 or beginning of 2021, the schedule is unlikely to be met. According to the report, it is “typically three years” between the delivery of the first samples and the start of production. Farasis planned to build batteries in Bitterfeld from 2022 – initially with a capacity of 6 GWh, later to be expanded to 10 GWh.

Employee representatives at Daimler have been calling for their own cell production for some time in order to be more independent of suppliers for the important component. However, both former Daimler CEO Dieter Zetsche and his successor Ola Källenius have always rejected this idea and rely on suppliers.

Update 26 February 2021: Daimler and Farasis have defended themselves against the criticism. “We cannot confirm speculations about the quality of cell samples,” a Daimler spokeswoman told electrive. As described above, the German publication Manager Magazin had reported that the first cell samples supplied by Farasis to Daimler were “disastrous”. Since Farasis was to supply about half of the cells required by Mercedes in Europe in the medium term, poor or unacceptable quality would have had a massive impact on the Stuttgart company’s upcoming electrification offensive.

The group now contradicts this. “The supply of our Mercedes-EQ electric offensive is assured,” the spokesperson said. “To this end, Mercedes-Benz has built up a well-functioning and very stable set of suppliers for battery cells.” The partners would manufacture innovative and high-performance battery cells according to Daimler specifications. “The prerequisite for this is also always Mercedes-Benz top quality worldwide with the same standard.” Beyond that, the company does not comment on the further speculations in the report.

Farasis did respond to the criticism, however: “This is simply not correct,” Farasis-EU managing director Sebastian Wolf told the Mitteldeutsche Zeitung. The technical properties of the battery cells delivered so far had already been tested, and “negative feedback from a quality point of view” was not known.

According to Wolf, the construction of the battery plant in Bitterfeld-Wolfen is still planned. As a reminder: According to Manager Magazin, no building permit has yet been granted, although cells are to be built there from 2022. According to research by the Mitteldeutsche Zeitung, this is true. The city of Bitterfeld has already given the green light to the factory plan, currently the application for building permission is still being processed according to the district of Anhalt-Bitterfeld, says the report.

manager-magazin.de (in German), Update info via email, mz-web.de (in German, update)