Nearly a quarter of the power required to operate BMW's Leipzig plant in Germany will be supplied by four wind turbine towers. BMW Group is doing this as part of efforts to protect its profits as costs are expected to rise due to Germany's 550 billion-euro ($740 billion) shift away from nuclear energy. This plant produces the X1 SUV and it’s also where the i3, its first electric car, will be assembled.
Meanwhile, Daimler AG is putting up a power plant at a truck facility and Volkswagen AG is considering a project to build at least five generators. What has been urging these German automakers to undertake these measures is a plan by Chancellor Angela Merkel to close nuclear reactors and give renewable energy a boost. This has resulted to higher taxes on power purchased from commercial producers.
Sebastian Bolay, an energy policy analyst at DIHK (a manufacturers trade group in Berlin), said that Merkel's energy switch has led to all German industrial producers either already generating their own power or seriously mulling this plan. It costs much less to generate one’s own power and it also makes them avoid the impact of grid failures. A 47% increase in a clean-energy surcharge in 2013 may add up to 254 million euros to the combined power bills of Germany’s auto manufacturers and parts suppliers. The surcharge has increased by as much as six times since 2006.
BMW, VW and Daimler (the parent of Mercedes-Benz) are facing the challenge of controlling costs as auto demand in Europe is on track to have its sixth straight annual drop in 2013 after last year’s sales fell to the lowest level in nearly 20 years. Due to the sluggish demand, the strain on automakers as the result of costly labor and high energy rates gets more intense.
Germany’s Economy Ministry said that last year, the power for big manufacturers in Germany averaged 10.4 euro cents per kilowatt-hour. In comparison, the average in France is at 7.25 euro cents, where PSA/Peugeot-Citroen builds the DS line that rivals BMW, and 6.76 euro cents in Romania, which is the base of Renault's budget Dacia brand.