When it comes to supplying the automotive industry, it’s out with the old and in with the new at BASF.
The No. 1 supplier of chemicals to carmakers plans to carve out its business supplying catalysts for curbing emissions from combustion-engine tailpipes. BASF will take some 18 months to create a standalone entity, before considering something like a sale or another strategic option.
Portfolio decisions like this one aren’t made rashly at BASF. The German company pioneered the development of the first catalytic converters that were fitted to 1975 GM cars. That was quickly followed by a three-way catalyst tackling hydrocarbons, carbon monoxide and nitrogen oxides. In 2006, BASF became the global leader in the market with the acquisition of Engelhard Corp. of Iselin, New Jersey.
But as a long-standing supplier to BMW, VW and others, the German company has a front-seat view of a rapidly transforming market. The accelerating shift toward electric vehicles is coming at the expense of gas and diesel cars, where regulations on emissions are tightening.
Instead, BASF sees its future supplying the increasingly complex cathodes that are the heart of an EV engine, determining a battery’s range and power. It’s a costly business. British rival Johnson Matthey Plc last month announced it could no longer make the numbers work and was giving up on its high-nickel eLNO cathode to concentrate on its hydrogen business. Work on a state-of-the-art plant in Poland had already started.
BASF is confident of getting there. Eyeing sales of more than EU7 billion from battery materials by the end of the decade, it’s planning to spend EU3.5-4.0 billion by 2030 to expand commercial production.
By then, the independent BASF Automotive Catalysts and Recycling, with 20 production sites globally and over 4,000 employees, could be a distant memory. the carve out work will begin in January and will include associated precious metal services. It will still be based at the historic Engelhard site at Iselin though.