Porsche scraps battery production plans at Cellforce unit

By Christina Amann

BERLIN, Aug 25 (Reuters) - German carmaker Porsche AG P911_p.DE has scrapped plans to produce high-performance batteries at its Cellforce unit, citing slow demand for electric vehicles and changed conditions in China and the United States.

The move, which according to a person familiar with the matter will see about 200 of the nearly 300 jobs at the subsidiary cut, is a further blow to European efforts to challenge Asia's dominance in automotive battery manufacturing.

Cellforce will be turned into an independent research and development unit, the company said in a statement on Monday.

"Porsche is not pursuing its own battery cell production for reasons of volume and lack of economies of scale," Oliver Blume, who serves as CEO of both Porsche and majority owner Volkswagen VOWG_p.DE, said on Monday.

The company, which declined to specify cutbacks, said some jobs could potentially move to Volkswagen's battery unit PowerCo, and Cellforce's expertise would also benefit V4Smart, the automotive battery unit taken over from Varta earlier this year.

Even as European carmakers seek to transition to electric vehicles to cut greenhouse gas emissions, hopes within industry and governments to foster a battery supply chain in Europe were frustrated by the collapse of Swedish EV battery maker Northvolt this year.

Porsche said in April it would no longer pursue plans to expand production at Cellforce. It had planned to construct a "start-up factory" in the southwest German state of Baden-Wuerttemberg in 2022, to be followed by a larger second location.

However, "due to a lack of volume worldwide, it is not possible to scale up its own production to the planned cost position," said Michael Steiner, Porsche executive board member for research and development.