Varta Troubles Highlight China Battery Challenge

The potential breakup of the major German battery manufacturer Varta is seen as a problem for the entire industry in the country, according to the battery expert Dirk Uwe Sauer.

A creditor group led by Deutsche Bank and the financial investors RBC BlueBay, Blantyre and Whitebox announced earlier this week that it intends to spin off the well-known household battery business from the Varta Group, blaming the company’s strained financial situation.

Varta confirmed it had filed for preliminary insolvency under self-administration, in a bid to secure its economic future.“There are only a few companies like Varta in Germany,” said Sauer, a professor at RWTH Aachen University.“If the company’s profit center is carved out, the question is how future innovation will be financed,” he said.

Varta said the insolvency filing was intended to enable the sustainable continuation of its business operations.“Technologically speaking, what Varta does is very good,” said Sauer. Ultimately, however, it all comes down to price.That, he argued, reflects a broader challenge facing Germany’s battery industry.

“We don’t have large-scale manufacturing,” Sauer said. By contrast, China has built up massive production capacity, triggering intense price competition.