Daimler CEO Says There’s Massive Overcapacity In Battery Cell Market


Daimler CEO, Dieter Zetsche

Daimler CEO, Dieter Zetsche

Dieter Zetsche, Daimler CEO, has decided against joining forces with BMW and Audi to invest in battery cell production in Germany.

Audi lithium-ion battery

Audi lithium-ion battery

Zetsche explained:

“Contrary to the expectation four or six years ago when everyone thought that the cells would be a rarity that could even be used as a tool of industrial policy, there is de facto a massive overcapacity in the market today and cells have become a commodity. The dumbest thing we could do is to add to that overcapacity.”

The CEO voiced interest in the prospects initially when Audi CEO, Rupert Stadler, suggested a partnership to produce batteries in Germany.

The three companies have proven the ability to work together in the past. Thomas Weber, development chief at Mercedes agreed that, “it could make sense to join forces here.” Diamler’s Deputy Chairman, Michael Brecht, has pushed, “not to leave cell production entirely to the Asians.”

Most of the cells used in the current German vehicles come from Asia. Daimler sees cells as mostly “interchangeable.” Zetsche recently had to halt operations on Daimler’s own lithium ion cell production.

He explained, “We had the best cell, which no customer could feel because the differences are minimal, but we had far too high costs.”

By the “best cell” Zetsche was referring to Li-Tec, a former joint venture with Evonik, that the company originally envisioned making all its lithium-ion batteries via (high costs ultimately ended that dream),  perhaps not surprisingly Daimler at one point attempted to sell Li-Tec, reportedly for as €1 billion . Perhaps twisting the knife a little LG Chem submitted an offer of €1 – as in one euro.

Zetsche is waiting until there is more information or a front-runner on the cell chemistry competition. Goals to increase density and lower cost has battery makers experimenting with lithium-air, lithium-sulfur, solid state, and others. Zetsche said:

“No one can say which of them will achieve a breakthrough. We all think it could take three to five years just for researches to reach that point, and five to ten years before it’s available on an industrial scale.”

Source: Crain

Categories: Daimler, Mercedes

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67 Comments on "Daimler CEO Says There’s Massive Overcapacity In Battery Cell Market"

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But of course, if you believe that you and the industry isn’t going to sell very many EVs, then the current state of capacity looks like overcapacity. LG Chem and Panasonic had massive overcapacity in 2011/2012. After closing down plants and the rise of the Tesla Model S, Panasonic had to expand capacity. LG Chem is still trying to get enough orders to really get their capacity fully utilized. Their new plants have more to do with geopolitical and cost reasons than capacity (joint venture in China for cost/tax reasons, expansion in U.S. for geo reasons).

But, if you think you need 60 kWh x 100,000 vehicles, that’s 6 GWh/year. No one other than Panasonic can deliver that for you, and Tesla has already spoken for Panasonic’s output. So where would you get the cells? The answer is, well, these automakers don’t believe they can sell 100,000 long range BEVs so they don’t need the capacity.


That overview seems reasonable to me.


Not if you believe that GM really wants to sell the Bolt

Chris O

…but why would anybody believe that? It comes with limited quickcharge capability (and none as standard) and GM has no intention to provide proper, Tesla style quick charge infrastructure for it. Without proper quick charge capabilities and infrastructure support Bolt’s market appeal will be limited, but enough to meet compliance needs no doubt.


People in bed with Big 0IL with an “AGENDA” to build More Problem Riddled Polluters…((((I Read that Mercedes got caught too!heir Diesel Pollutes 62times more than they should)))) And they still refuse innovation & change…


I think the U.S. should immediately ban all diesel cars from being imported, as a noted neo political hack is found of saying, until we get things figured out, we should not allow anymore diesels into this country.

Funny how just changing a single word makes a statement that would be something beneficial as opposed to the bigoted, small minded, inflammatory, content of the original statement.

Btw, I think it was 40x whereas when the temperature fell to under 40* f, the nox emission scheme reduction components just simply turned themselves off.


As far as today and immediate future is concerned, there is overcapacity (Bolt isn’t even out yet). Massive? That depends on your definition. Suffice it to say, demand is being met.

As for Mercedes, they have very little interest in making their own cells, and I think rightly so. That doesn’t mean they can’t buy from other vendors, such as LG or even Tesla. As he pointed out, difference in cell was small while their cost was high, and it’d be cheaper to just buy from specialized battery makers while they focus on their core competency: carmaking.


Exactly. Mercedes doesn’t get it and still doesn’t get it. You would have thought that the Model S kicking their ass would have woken them up but apparently not.


The deer in the headlights is responding to an instinct to freeze when a predator is near. Similar to Mercedes in the sense that it, the deer, cannot conceive that in a matter of seconds, it will be splattered all over the highway. Likewise Mercedes.


Nice analogy.


This is just sour grapes they couldn’t build batteries cheap enough to be competitive, nothing more.
And all they had to do was produce EV’s to used them up they chose not to do.
In their defense no car company has ever made EV batteries correctly.
Tesla is an electronic/battery/computer/EV drive systems company using EV’s to sell their products. Because of this they are far better making EV’s.
The question is will LG be satisfied just making batteries, parts?
Apple? Google?
Lithium battery production will have to double every yr or 2 for quite a while to keep up with EV demand and add the huge home, building, grid battery market could be as large as EV’s to that.
Luckily there is no limit on lithium battery production materials as plentiful, cheap.




“We had the best cells which no consumer could feel…” …because we don’t make EVs outside compliance numbers. :oP The consumers are waiting for you to suck that overcapacity dry and deliver some kick-ass cars Dieter.

I wish I could reach inside the interweb and smack some old-school sense into that man… :oP

Big Solar

me too, what a hard head.

The reality is that only Tesla is selling a competitive product versus ICE in their competitive segment. Both the Leaf and the i3 have underwhelming sales figures. At 17,269 Leafs last year in North America and 11,024 i3’s, 44,000 Leafs worldwide, 24,000 i3, no major automaker is thinking they need to be able to build 100,000 BEVs. The Bolt, at 25,000 a year, is only 1.5 GWh which is well within the dormant/unbuilt capacity of LG’s Ochang facility. Tesla managed to sell 50,000+ BEVs that were competitive in their segment. Toyota is targeting 300,000 to 350,000 sales volume for the Prius. At less than 50,000, the best selling non-Tesla BEV is the Leaf and that doesn’t really get the automobile executives excited about capacity increases. That makes what Tesla achieved all that more remarkable. That also underpins the skepticism with respect to Tesla’s projected sales volumes and the need for the Gigafactory. Of course, for Tesla, they want to move to 75,000 to 100,000 sales of the S+X and then onto 100,000 Model 3’s. They need somewhere around 14 GWh to pull that off in 2017/2018. They can’t get anyone else to invest that kind expansion as none of them… Read more »

People are still waiting for the cheaper 200 mile BEV…and sometimes cars such as BMW i3 are extremely hard to find at dealer locations, especially in countries like Sweden. I haven’t seen a single TV-ad for the BMW i3 yet. I think they would sell many more if they sorted out the issues with the rEX-driveline and actually tried to sell them. People still need some convincing when it comes to new technology, and some brands are just not willing to show what they actually got for different reasons.


BMW is a strange company. I’m much more familiar with their motorcycles than with their cars, but basically, I don’t think they’ve ever managed to sell vehicles to sopmeone who wasn’t already a fan of the company (possibly excepting the Isetta of the 1950s (-: )
Look at the i3: They worked hard on energy efficiency, and are pushing it hard in marketing, when it’s only really makes a difference for taxi-level annual mileage.

The REx is milquetoast, not quite practical enough to make it a PHEV but still forcing quite a few compromises.

It may handle better than other EVs, but it’s not a sportscar, so that matters a lot less to the public at large — it’s pretty much the least sensible EV on the market, given the combination of people/luggage capacity, cost and range, so no wonder it’s not selling very well.


They didn’t really sell the Isetta’s in the US, they were given away when you bought a Cadillac as part of the Marshall Plan for European recovery after WW2 !!

Mutwin Kraus

I think they said that around 80% of i3 customers were new to the brand.


Tech01x said:

“At less than 50,000, the best selling non-Tesla BEV is the Leaf…”

Nissan did manage to sell about 60,000 one year. Probably not last year, though.

It seems reasonable to expect longer ranges will result in higher sales volumes.


I think deter is saying in 10 years cells will be much better, but mercedes doesn’t think they have the inside track to the best cells. LG and Tesla/panasonic are building gigafactories. Samsung has a pretty good product as well, and who knows JCI or A123 might bring one out. Might as well import cells from the best bidder until the things stabilize. This is not nimh with a japanese monopoly and not much room for improvement. I can even see nissan leave nec and cell production and purchase cells from the best bidder. Mercedes is saying they don’t want to compete here, might as well pick the best supplier which is probably the gigafactory to them for new designs.


A123 Systems? Are they actually still doing any research?

Jake Brake

He is right that OEMs should stay out of cell production. But maybe missing the part where LG is building a new plant in europe to likely meet the demand. http://insideevs.com/lg-chem-build-battery-plant-europe/


Peanuts. With Ochang at “200,000 batteries” that’s estimating a battery is around 16 kWh. That makes sense when factoring in PHEV battery sizes. So the new European plant is expected to produce under 1 GWh annually, or enough to build 13-14 thousand Bolts or not even 1 quarter’s worth of Model S’s.


You’re assuming there will be much higher demand for LG batteries. Since Bolt isn’t even out yet, and all the negative publicity that GM is trying to accumulate before Bolt’s release, I doubt there will be cell shortages.

Even if there will be shortages, it’s not likely to happen overnight, and LG will expand. Whether that will lead to short term shortage is unknown, but that will be just that: short term.


The issue is both capital and lead times. The battery companies don’t have the capital to take that kind of risk. The lead times means that even when the big automakers want this done, it will take a while so the ones that invest early will likely be winners.


It’s always about capital and lead times. But my point is that demand will be gradual, allowing time for capital and lead times to adjust. LG, Samsung, etc. are not some two bit players who aren’t able to take the risk if there’s demand.

Even considering the worst case (or best case for us EV enthusiasts) that any EV becomes a sudden hit and need 100,000 units per year almost overnight, that will spur demand, causing other players to ramp up as well. That will be short term shortage only, year or two, if that.


Lead time ramping up is 2 yrs, mostly building lithium refineries. The rest is just ordering the machines and finding or building the building.
But 2 yrs is as fast as they can put an EV into production anyway and one wants a source before green lighting production.
And once batteries are $100/kwhr and under $200/kwhr retail, the home market is huge as a lot of people are fed up with overpriced utilities gouging them.


true dat.


Just get going man and do us an affordable electric car. If as you say the market is full of batteries, then why is it that you are lazy?


Mercedes has never built anything “Affordable” You got to Pay Top dollar! PLUS For parts & especially Service too! I know, 21yrs now, I’m done!

Someone out there

Well that is the idea with the Mercedes brand in the first place. You buy a Mercedes to show other people that you can afford to buy a Mercedes.


EVcarnut, In Europe Mercedes is more like Chevy. It’s only here, other places it is hyped as high class and overpriced.
I found diodes in a wiring harness that couldn’t be serviced enclosed in the frame without replacing the harness made me say no thanks to them designed like that.

Three Electrics

As I’ve said repeatedly, batteries may turn out to be like tires. Who invests in capacity to produce their own tires? They’re a commodity. Just buy them.


Batteries are more like NAND flash market than tires.

Someone out there

The battery is by far the most important component in an EV. The battery dictates what the car can or cannot do. Therefore it makes perfect sense for EV manufacturers to spend a lot of focus and effort on the battery


While true that leaves Tesla with at least a 15% advantage making their own.
But then Tesla is a battery company making EV’s with lots of batteries.
Though with car companies luck building EV batteries, best they buy them from others.


Tires are several orders of magnitude less complex than batteries. And the need for them to improve is minimal, versus a huge need for better batteries.


Kumar, nothing could be more different from the truth.
Tires need a lot of improvement both cutting rolling resistance and grip.
EV’s just switching to low drag tires can get 10, even 20% more range for instance.
And easily as complicated as a battery cell.


Street legal cars aren’t designed around what kind of tires they have, and auto makers don’t compete on that basis. But compelling plug-in EVs most certainly are, to a greater or lesser extent, designed around the battery packs they have. PEV makers do compete on the basis of their battery packs.


I don’t agree with the analogy at all. The batteries are more like engines. It is critical to the car and makes up the major cost and component of it (even more than the motors).

Tires however are replaceable, a low percentage of the cost, and easily swapped for a different one.


Yeah… and in three years all these ICE-company CEOs will say:
“Who could have predicted that 200 mile range EVs sell that great? We have a battery gap, but that’s not our fault…”

GM will notice too, that capacity for 50k Bolts worldwide isn’t nearly enough.

Michael Will

My suspicion is that GM positioned the Bolt to be just enough to beat tesla to the market to absorb early demand, but then disappoint in usability with slower charging and no adaptive cruise control while the GM Volt then shines in comparison by being readily available, having decent electric range, features, and better than i3 range extender gas portion to make PHEV look better than BEV. I am not worried tho, won’t hurt tesla and GM will shift as demand overwhelms their marketing steer.


My suspicions fall along those lines too.
Not much more to contribute except the Bolt will be like the halo ev. Get people into the dealerships to check out the Bolt and then try and sell them a Chevy Cruise.


The people who want the Bolt will not be interested in anything else. They’ve been dreaming on it for years.

Someone out there

The 50 kW charging isn’t set in stone. The current charging network only supports 50 kW but there is nothing stopping it upgrading to higher power once there is customer demand for it.


And of course, again, most of us here know better than him :-).


Just because a person is in charge does not mean they are correct. Of course he is the boss so you have give him something, but to a person everyone here has probably worked for a boss that did stupid things, quite often, simply because no one had the guts to tell them they were being stupid.


Mercedes went with SK for batteries as I recall, I presume that was for capacity.


In truth, the battery “supply constrained” narrative was clung to, far too long. When Trump becomes President (cough, gag…), a couple regulatory levers and the continued capture of the Euro market regs, by Dieter and friends, will cause overcapacity.

Tesla could be a niche player for a long time, with dumb Mercedes buyers thinking their drive trains are something special.

It would be must-see TV if Trump reboots Celebrity Apprentice after he finishes his second term as President (third term if he can get a constitutional amendment passed), and gets Elon Musk, the former CEO of defunct Tesla Motors, to be a contestant on his reality TV show. By that time, Tesla would have long ago went bankrupt because it couldn’t pay off the huge debt on its white-elephant Gigafactory due to overcapacity in the Li-ion battery industry. Somewhere, in a darkened room Dieter Zetsche sits in a leather chair watching Celebrity Apprentice while smoking a cigar and twirling his mustache. After Elon and his team fail at their assigned task due to Elon’s hubris, over-sized ego, micromanaging, and questionable vanity design choices, ex-president Trump scowls at Elon and blurts out his infamous catch phrase: “YOU’RE FIRED!” The up to now silent Dieter Zetsche lets out a sinister BWAHAHAHA laugh. As a side note, the product that Trump tasked Musk with developing was a better, improved toupee. Musk, against the advice of his teammates, insisted on a permanently attached falcon-wing toupee that he claimed was superior to other toupees on the market, since it allowed cleaning of the scalp without… Read more »
Get Real

Wow sven, maybe you should try and become Trump’s political advisor or court jester?


this year will be quite decisive for EVs—-(possibly and hopefully for short term negative outlooks,though):1./will Tesla survive the X glitch…Norvegian accident etc.,quality issues… 2./will the Bolt be a success(without charging network?? 3./will the Volt 2 gain popularity??(without fast charging possibility…) 4./longer range Leaf,Kia Seuol,and the new BMW i3??? 5./and the last :US election,Koch brothers,oil price,CHINAs pollution politics, etc. 5./will humans apply just a bit intelligence,responsibility to reduce (even individually) global CO2 output and warming??????


Good questions.


While Daimler CEO, Dieter Zetsche, speaks of “over capacity” he really is referring to “cost” to produce cells.

As a manufacture it must be intimidating to enter a market where the price has been dropping ~6-8% for the last 20 years, and is expect to continue for the next 20 years. This however doesn’t preclude Daimler getting into the battery pack business (making use of all those cheap cells).

NOTE: Beyond automotive EVs, there is a much larger demand for cell capacity production from the “energy storage” market. The ES market will likely eat up any excess cell capacity that exists, as long as cell prices are competitive.


You’re assuming that lithium-ion battery tech will be the defacto best-choice/lowest-cost choice for the energy storage market in the future.


sven, lithium isn’t even yet, lead still is until lithium hits $200/kwhr retail.
And that will take another 3 yrs.


I was thinking of something along the lines of Li-ion losing out to a battery storage technology that can not be manufactured in the Gigafactory, like a redox flow battery. It seems like redox flow batteries can scale better for grid level storage of electricity, since the amount of storage can be increased by simply installing larger holding tanks. Unlike EVs, it doesn’t matter how big or heavy a stationary grid storage system is, i.e. the current lead batteries.




Not a very good design Sven. Just what does it have advantage over more normal type batteries?
It still takes up the same or more spaces, materials but adding pumps, other extras that cost, can break..
And other metal air, other batter types beat it too.

Someone out there

Sure, if you produce battery cells but then don’t produce cars that utilize these cells, of course you are going to have overcapacity! Make a proper EV (the SmartEV doesn’t count) to a decent price and you will quickly reduce that overcapacity.


“…there is de facto a massive overcapacity in the market today…”

“We had the best cell, which no customer could feel because the differences are minimal, but we had far too high costs.”

This looks rather like a “sour grapes” attitude to me.

Regarding that supposed “massive oversupply” of batteries appropriate for use in plug-in EVs, I’m sure that will come as a great surprise to LG Chem, Panasonic, BYD, Nissan, and Tesla… among others. [/snark]

So long as Daimler has no plans to build long-range PEVs in large numbers, then yes, they can safely rely on buying “commodity” li-ion batteries. It’s only when an EV maker wants to make and sell such cars in large numbers, like Nissan, Tesla, and BYD, that an EV manufacturer needs to control its own supply.


Tesla makes and sells batteries and stationary battery enclosures (Powerwalls).

What if they made a modular trailer that fit a couple gen 2.5 / 3.0 Powerwalls into it, so you could take them cross country with you, for extended range trips?

Hang them back on the walls when you get home.


Ever seen lawnmowers and utility trailers that fools up against the wall for storage when not in use?

I’d like to see the same in a power trailer, except it would be in use both when folded down for road travel, or folded up against the wall in power supplement use.


This might be a stealth reason for the X’s towing capacity


I think he is right, if you move to bigger batteries who cares about performance? Do 200 mile bevs need to be lighter, faster, smaller than the model S? No not really, they need to be cheaper, if I could buy a leaf or a bolt for sub $40k that did 200 miles on a charge and 0-60 in 8 sec I’d be over the moon – that is no where near model s specs. If u triple the size of the current leaf pack it could give u 240kW of power in current form, more than you’d ever need in a family hatchback.

Is there a massive difference in performance between byd, Panasonic, lg, Samsung, etc… Yes, would you notice at family hatch level? I really don’t think so. Would you notice in the phev’s merc is pumping out? Not really – they are just petrol cars with a little splash of ev the performance is set by the ice part of the equation.

Battery supply chains are maturing pretty quickly, hopefully we have seen the back of battery supply bottle necks and can move to the next level now.

M Peg

Herr Dieter Zetsche, there’s an expiration date that to that overcapacity. Even a billion bananas in a warehouse will rot. You end up with none. You need continuous production in line with innovation. The Gigafactory is the hushed secret leverage which shall not be spoken.

Non Olet
Considering new players like ATL(which is, already one of the top tier ones for phone batteries) coming into the market everyday, Zetsche’s comment can’t be more correct. BYD is building up its capacity by “6 GW” every year. And guess what, its new capacity is so hightech that it’s fancier than LG Chem’s plant in Korea. While ATL has no reference for EV battery market, well I think it won’t take long for them to get some. There are so many GWs coming in from so many directions. Tesla/Panasonic, LG, Samsung, BYD(though they plan to use virtually all of their own capa), BYD, and other Chinese makers I haven’t heard of or can’t remember the names… Meanwhile, even assumping EV sales will go up at almost double every year, well… I think it will not be enough for the new capa. Just like 5 yrs ago. Back then less cell manufacturers, with small demand. But who knows, maybe Bolt and Model 3(so many years to come…), or some new BYD can make a huge difference. I hope so. Therefore, cell oversupply is imminent and visible. If you have other numbers that shows the other way… please teach me. I am… Read more »