Future technology. Sven Bauer, CEO and founder of the BMZ Group, has turned the company from Karlstein am Main in Lower Franconia into a global player in the energy storage sector. Now he wants to set up his own battery cell production in Germany in order to become independent of Asian suppliers.
The problem of climate change will only be tackled if we stop using fossil fuels for the foreseeable future - no oil, no gas, no coal," says Sven Bauer. Then he corrects himself. To speak of a "problem" is actually wrong. He likes "challenge" better. "Because the good news is that a real energy revolution is possible. We can decarbonise all sectors - electricity, transport and heat. But for this we need energy storage systems, vast amounts of energy storage systems. And that's where I come in."
Bauer and his BMZ Group are in the middle of a gigantic growth story. "All industry analysts agree that the global demand for energy storage will triple from 120 gigawatt hours today to 2025. Every fifth job in Germany soon depends on the battery." The cordless lawn mower, the cordless drill, the laptop battery - all these things existed ten years ago. "But now the E age is dawning. The desire for the greatest possible individual mobility is the big issue in an individualized society."
And a revolution is also looming for homeowners: "While most of the electricity generated by solar cells on the roof had to be fed into the grid of a utility for a long time, they can now use it themselves with modern energy storage systems". The acquisition costs for a photovoltaic system would amortize faster, at the same time it would make homeowners self-sufficient and guarantee security of supply. In addition, it would be cheaper if network operators and utilities would soon introduce time-of-day electricity tariffs in order to smooth peaks. Those who produce a surplus on their roof can then decide whether to use it themselves or sell it if electricity is particularly expensive.
"They will laugh, but batteries are indeed my great passion," smiles Sven Bauer. "Batteries and energy stores have fascinated me for 25 years. It sounds trite, but I've turned my hobby into my profession. It's incredibly exciting to see how smartphone batteries are getting smaller and smaller, for example, or what e-bike batteries can do these days."
Bauer, born in 1966 in Erlenbach am Main, is a trained toolmaker, passed the master craftsman examination, later studied engineering sciences at the Technical University of Darmstadt and finally switched to the battery specialist Saft GmbH as production manager. In 1994 Saft wants to part with his accumulator business. This leads to a management buy-out, which, however, goes wrong and leads to insolvency.
Now Bauer sees his chance. He handles the insolvency on his own and takes over the machinery from the insolvency assets. On board are his comrades-in-arms Claudia Reimer and Thorsten Gotthardt. However, because they do not have any capital at their disposal and the banks show themselves to be closed, the then only 25-year-old farmer raises the necessary 150000 D-Mark himself. "I put everything on one card, scraped all the money together, even cancelled my building loan contracts."
BMZ - the abbreviation stands for "Battery Assembly Centre" - only has twelve employees at that time. Bauer recognizes the gigantic potential of lithium-ion cells as an energy storage medium when many competitors still rely heavily on lead and nickel-cadmium batteries. Sales are growing continuously. Claudia Reimer and Thorsten Gotthardt leave the company - "as agreed", as the entrepreneur emphasizes.
In August 2008 then the setback. A production hall and a warehouse burn down completely due to a technical defect. Around 200 firefighters only manage to extinguish the fire after several hours - lithium burns like tinder. The company suffers a loss of 17 million euros. "The fire was a key event. We were, of course, insured. But that doesn't solve the short-term challenges, after all, we were in a situation of rapid growth at the time and had to make quick decisions."
Sven Bauer is taking another full risk. He distributes the tasks to his closest employees and tells them to promise the customers that all orders will be delivered on time. "We saw the crisis as an opportunity, worked till we dropped. After all, we had ordered cells for 20 million German marks from our suppliers. Within two months we produced more than before the fire - without knowing if the insurance would ever pay." In the end, she regulated, but the last installment of 2.5 million marks had to be waived under a settlement. "This has been my most expensive day to date," says Bauer.
What kept him going then? "I was sure that batteries would be the big thing." Today, BMZ is one of the largest players in the global battery industry. About four out of five battery packs sold in Germany come from his house. "We equip forklifts, buses, cranes, boats, wheelchairs and e-bikes, not to mention cars." In order to keep up with production, Bauer is investing a three-digit million sum in a new logistics centre and in the expansion of the headquarters in Karlstein - a lot of money for a medium-sized entrepreneur. Everything should be ready by the end of 2019. "But we are also investing in other locations. Because we have to be there when the electric car boom starts."
Exactly when it will be, Bauer can't predict either. The BMZ boss expects a growth curve similar to that of e-bikes: "First very flat for a long time, then suddenly steeply up." It is the end customers who then do the marketing, according to the motto: Get in and try it out. "Suddenly it's very fast.
And then car batteries will be the big topic in terms of sales."
With the e-bikes, Bauer has already gone through exactly this development. Many end customers do not even know who is responsible for which part on their e-wheel. Sure, the engine comes from Bosch, Brose, Shimano or Panasonic. "But they don't build the battery," Bauer explains. "That's what they need us for. The engine manufacturers are approaching us and want our know-how: How does the thing become waterproof? How small can we make it? How to increase the storage capacity? How to reduce unloading speed at low temperatures?"
BMZ supplies all this from a single source. Torqeedo (private wealth reported about the company in issue 03/15), today's world market leader in electric boat engines from Starnberg near Munich, has also accompanied the company from the very beginning. "Our development engineers are always on site." It is this complete service that makes BMZ so indispensable for many customers. "We help with DIN certification and TÜV acceptance as well as with construction, design or recycling."
It would require a whole armada of experts, from chemists to electrical engineers, from lawyers to materials engineers. A battery pack for an e-bike, which is charged 60 to 80 times a year on average, could perhaps also be offered by others. But with a forklift truck whose battery is in use 60 to 80 hours a week, things look different. Bauer is convinced that such a high-tech device will never be a "commodity", an exchangeable product. The same is true for car batteries. The manufacturers rely on different cooling and heating systems, on different hardware and software. "This is all very complex and changing rapidly. Every six months, new batteries come onto the market from us."
The German carmakers, including the premium manufacturers, have now at least partially recognised the signs of the times. "Bauer is convinced that the biggest blockers at the moment are the traders. "For they have most to lose. They earn more with the maintenance and service of combustion engines than with the sale of new cars." For him, it doesn't matter in principle who wins the race: "We can build all the batteries and implement all the technical solutions".
It was clear to the BMZ boss early on that he would only be able to attract the specialists needed for this to Karlstein in the Franconian province if he offered them more than others. "We cannot and do not want to pay as much as in metropolitan regions," he says. In addition, experienced battery experts were not to be found anyway. "So we get young people out of university and train them with us, pull them up step by step. It'll take time, but there's no other way."
It is particularly important to him to offer an exciting environment that is very personal and provides for close contact with the boss without large hierarchies. "We're counting on personal responsibility, on speed, on risk."
Bauer sees his BMZ as a large start-up: "Our people are allowed to make mistakes, they should even make mistakes. This is the only way to create innovation. We can learn a lot from the United States. There this culture is much more widespread and accepted. In Germany, everything must always be perfect. But our industry is also and above all about speed."
He likes how Samsung reacted to Apple's first iPhone at the time: "They sent three development teams of 150 people to the start, time frame: seven months. Only one, the best idea, would be implemented in the end." Bauer likes such an approach - with one big difference: The unsuccessful Samsung teams were fired. "That wouldn't happen with us. Failure is allowed. And many years of experience is a treasure that we guard."
The entrepreneur has often been officially confirmed that this is the right way to go. BMZ has been among the "Top 50 companies in Bavaria" four times and received the "Zukunftsarbeitgeber" award from the Technical University of Munich in 2018.
Anyone who experiences Sven Bauer in his daily dealings with his employees can well understand this. "Sven, I was thinking about how we could sensibly recycle our waste," announces a fitter during a tour of production. Sven, the CEO, wants to be educated by everyone, he does the same. Shortly thereafter he stands together with the fitter and a product manager and listens to the idea concentrated. "All contribute their part to success. I'm aware of that and it's very important. At BMZ, everyone has a voice and is welcome to use it constructively. The best ideas sometimes come from production and not from highly paid strategists. I come from very simple backgrounds and have never lost my grip. I'm going up to my people at eye level. At BMZ, everyone should feel valued."
So far Sven Bauer has mastered all challenges with this attitude. But the big test - also for Germany as a business location - is still waiting for him. "Germany is dependent on Asian suppliers for battery cells. We ourselves purchase cells for more than 120 million euros annually. It's dangerous and it can't go on like this." Currently, the market for lithium-ion cells is dominated by Samsung, LG, Panasonic and Sony, which share around 90 percent of the market.
"The only reassuring thing about this scenario is that for more than 20 years we have maintained a very trusting relationship, particularly with Japanese manufacturers, which goes far beyond the traditional customer-supplier relationship and therefore guarantees us a high level of supply security. BMZ even had Sony produce its own cells for specialized battery packs. Nevertheless, Europe must not leave this growth market to the Asians: "Many chemicals and machines for cell production come from Germany anyway. It would be logical to set up our own cell production in Germany in order to be able to cover at least part of our domestic demand ourselves in the long term," argues Bauer.
The Federal Minister of Economics, Peter Altmaier, has now addressed the issue and launched a funding programme worth several hundred million euros. A consortium with a team of experts from renowned companies and universities is to initiate cell production and produce one gigawatt hour by 2022. By 2028, the target is eight gigawatt hours. "We're in with our daughter TerraE," Bauer informs us.
TerraE was founded in 2017 after six member companies of the KLIB (Competence Network for Lithium-Ion Batteries) had formed an initiative to build a large-scale series production facility. Within the consortium, however, there were conflicts of interest - none of the participants was prepared to bear the risk alone or to a large extent alone. So Bauer took over the start-up for a one-digit million sum.
Today TerraE is his ticket to Berlin. The funding application has been developed and submitted to the Federal Ministry of Economics and Energy (BMWi). The only thing missing is the "go" of politics. "We're on the right track. We have worked out a future-oriented plan together, summarized it in a comprehensive application and successfully started the selection process. Now we still need investors from industry to demonstrate initiative."
Berlin unfortunately overslept the topic in the past, while China's government, for example, promoted cell developers with high subsidies. "But now something's finally moving." The Federal Ministry of Education and Research also intends to invest half a billion euros. At present, it appears that North Rhine-Westphalia could become home to the first German cell factory. Perhaps there will also be another consortium in the direction of cell research. Bauer doesn't want to reveal any details, just so much: TerraE is involved here as well.
This balancing act is not without risks for the entrepreneur. After all, he wants to offer his German partners know-how and start-up capital without annoying the urgently needed suppliers in Asia. It was therefore not until the end of 2018 that he signed long-term supply contracts with Korean battery cell manufacturers worth almost one billion US dollars. Of course, the plans for German production had shocked the partners in Asia, but constructive talks had been held with all those involved. "We will still source the majority of our cells from our partners in the Far East. But we need security in Europe," explains Bauer.
At the same time, he plans to launch his own extremely efficient cell on the market as an intermediate step. It is to be used primarily in company-owned and customer-specific battery systems. The promise for clients: 100 percent longer service life, 68 percent more power, 88 percent more energy, 400 percent more charging current and up to 60 percent more capacity.
For Bauer, the topic of cell factories is so important because BMZ is growing rapidly. In the year 2000 he had still spent a turnover target of 500 million euros for 2020. By 2019 it will already be 560 million, in the following year it will be more than 700 million. He is not even afraid of a cooling global economy. "During the great financial crisis of 2008, BMZ grew by ten percent. For us, it was even a chance to get good people."
He does not expect any problems on the technology side either. "I think it is unlikely that someone would quickly invent a completely new type of energy storage system that would make the lithium-ion batteries used by BMZ unnecessary. They will remain the standard at least until 2030. I just don't think that two Harvard students would come up with something that 2500 Samsung engineers wouldn't have thought of."
The question of capital could become more serious. Rapid growth and high investments in research and development must first be financed. Does Bauer, who on previous occasions has always stressed that an IPO would destroy the corporate culture, now think about an IPO?
"It's one of several options," the entrepreneur admits today. He could imagine, for example, the conversion of the GmbH into a KGaA and the issue of non-voting preference shares. "But it all depends on many factors. We are currently only doing what the capital market calls IPO readiness."
So Sven Bauer, whose BMZ will be 25 this year, still has a lot to do. That the next quarter of a century will be similarly successful and that our innovative strength will not diminish. To do something good with our work for a better, cleaner environment, in which vehicles and equipment of all kinds are powered exclusively by electric motors whose electricity comes from renewable energy sources. And that in this way we can meet the challenge of climate change." ®
Sven Bauer and his "start-up" BMZ.
According to BMZ, it is now the number 1 on the market for lithium-ion batteries in Europe. The group - 2800 employees - has its headquarters in Karlstein am Main, where two 4800 square metre production units are located, and has further production facilities in China, Poland and the USA as well as branches in Japan and France. In addition, there are research and development locations worldwide.
BMZ boss Bauer has been awarded numerous prizes, including "Germany's Best Entrepreneur", "World Entrepreneur of the Year" and "Entrepreneur of the Year" three times. He is also the author of the book "AkkuWelt" and a sought-after speaker at industry conferences.
Author: Dr. Günter Kast