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Daimler Battery-Unit Savings Push Puts Evonik Venture in Limbo

Feb. 23 (Bloomberg) -- Daimler AG is seeking savings at its Li-Tec battery joint venture with Evonik Industries AG, leading to uncertainty about the future of the cooperation, Evonik supervisory board member Michael Vassiliadis said.

“Evonik is unsettled because Daimler’s not sure how it will proceed while technology is improving,” Vassiliadis said in an interview yesterday in Haltern am See, Germany. “You’d have to ask Daimler what the future of Li-Tec is.”

Evonik Chief Executive Officer Klaus Engel said in October that slack demand for electric vehicles coupled with fast-growing supply has put pressure on prices. A three-digit-million sum and a lot of extra risk would be needed to keep up with the industry’s rapid development, prompting the Essen, Germany-based company to seek a buyer for its battery activities, Engel said.

Uncertainty about the cooperation in terms of costs and other partners is causing difficulties, said Vassiliadis, who is also president of the mining, chemical and energy union IG BCE. Daimler has been reviewing options for Li-Tec since June, including bringing in a new partner, it said at the time.

Daimler is “convinced” of Li-Tec’s technological expertise, a spokesman for the Stuttgart-based company said in response to Vassiliadis’s comments on the joint venture.

Li-Tec, which is based in Kamenz in eastern Germany, hasn’t generated much interest among potential buyers with only Korea’s LG Electronics Inc. making a symbolic 1-euro ($1.37) bid for the battery cell business, Manager Magazin reported in December.

Evonik holds 50.1 percent of Li-Tec, with Daimler holding the rest. The German chemical maker also makes electrodes and ceramic separators for lithium-ion batteries.

To contact the reporters on this story: Tino Andresen in Dusseldorf at tandresen1@bloomberg.net; Sheenagh Matthews in Frankfurt at smatthews6@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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