Invest Region Leipzig GmbH

Future Mobility Opportunities for UK Companies in Leipzig - Germany

Cities like Leipzig continue to attract UK auto innovators

That quintessentially British icon, the MINI, is being reimagined for the net zero age across three global production sites: its traditional home in Oxford, UK (thanks to some last minute incentives); by Great Wall Motors in Zhangjiagang, China; and by BMW in Leipzig, Germany. Production at the BMW Group Plant in Leipzig begins in November 2023 and will be the first time a MINI model (Countryman) is produced in Germany. Global production of British brands is just one aspect of the changing face of automotive manufacturing which offers UK companies international opportunities in new markets.

The challenges of Brexit are well-documented and an increasing number of British firms are seeing the value in establishing an EU entity; and for many, Germany is an obvious choice. The number of British companies setting up in Germany increased by 20 percent in 2022 according to Germany Trade & Invest (GTAI), surpassing China as a source of investment projects. GTAI tracked 170 expansion projects from UK firms worth over EUR 750 million which make British companies third behind the USA and Switzerland for German investments.

While UK firms have chosen to locate all around Germany, the Leipzig Region is particularly interesting. Among the British brands that have chosen to locate in Germany’s fastest growing city since Brexit are the award-winning eCommerce firm, Huboo; and the University of Lancaster, which became the first UK public university to establish a physical campus in Germany.

UK Automotive and International Expansion

The British automotive sector is already one of the most international in outlook. According to SMMT, the UK automotive trade body, in 2022, eight out of every ten cars produced in the UK were exported. By far the biggest export market for the UK auto sector is the European Union, with 349,424 vehicles, 57.6% of the total exported.

SMMT is playing a vital role alongside the Department of Business & Trade, together with British Consulates and Embassies overseas in supporting the international expansion of the UK's automotive sector. This support has seen UK Pavilions at the Electric Vehicle Symposium (EVS36) in California, with a similar presence being planned at auto shows in Dubai, Korea, India and the hugely important Automechanika Frankfurt in September 2024.

EU Opportunities and Future Mobility

Globally, the cross-border demand for EVs and future mobility is creating a surge of foreign direct investment. The fDi Report 2023 identifies exceptional growth in electric mobility projects between 2016 and 2022. In 2022, some 294 electric mobility projects were recorded around the world, representing a substantial increase from the previous year and capex reached $106 billion.

Germany’s automotive industry is the largest in Europe and renowned as a primary location for innovative car manufacturers and suppliers.

"7 out of 10 premium cars produced in Europe are manufactured in Germany – A number which impressively illustrates the country’s innovation power – particularly important for the premium segment," according to Oliver Seiler, Director Mechanical & Electronic Technologies, Germany Trade & Invest.

Tighter carbon emission reduction targets and the German government’s electric mobility initiative are drivers for future growth. The demand for connected cars and information components will increase significantly - especially in the premium segment.

According to the German Automotive Industry Association (VDA), “from 2023 to 2027, the manufacturers and suppliers of the German automotive industry will invest more than €250bn in research and development worldwide. The focus of the R&D investments is on the transformation, in particular electromobility - including battery technology, autonomous driving and digitization”.

Between January and June 2023, there were more than 700,000 electric vehicles sold in the EU, and three of the top five manufacturers were German - Volkswagen (#1); BMW (#4) and Mercedes (#5). In terms of new EV sales, most EU markets recorded impressive gains, such as the Netherlands (+90.1%), Germany (+64.4%), and France (+52.0%).

For 2023, we expect European EV sales, including battery electric vehicles (BEVs) and hybrids, to increase by 15% over 2022, supported by a brisk passenger-car market recovery of about 10% year on year,” stated Neil King, forecasting lead at “All the growth is in BEVs, which we forecast will improve year-on-year by 29% and will occupy about 70% of the EV market in 2023.

Leipzig Region is a Hub of Auto Innovation

Leipzig is at the forefront of the electric revolution. 1 in 4 electric vehicles in Europe are currently produced in the Saxony region, with five major production sites operated by Volkswagen, Porsche and BMW as well as being home to around 780 suppliers.

Leipzig Region, with its strong automotive cluster, is the ideal starting point for British companies looking to take advantage of the market opportunities in Germany.

What started as a brand new cluster in 2002 when both BMW and Porsche chose Leipzig for new manufacturing facilities, has grown over two decades into a thriving location for the entire supply-chain of automotive production. This growth has attracted many companies to the Leipzig Region, including E-mobility software companies like Intech and IT service providers like Ferchau Leipzig Mobility.

Major reinvestments in Leipzig plants have created new opportunities. As well as the plans for the new all-electric MINI, BMW is producing its i3 and i8 EVs at the site – one of the world’s leading plants for electric vehicles and lightweight carbon construction.

Porsche is investing over €600 million in the fifth expansion project at its Leipzig plant which now employs 4,400 people and 1,000 robots. Already net carbon neutral, the Porsche plant is preparing to kick off production of an all-electric SUV, the E-Macan.

Porsche board member, ­Albrecht ­Reimold,says: “We’re pursuing the goal of making our entire value chain net carbon neutral by 2030, which also includes a carbon-neutral service life for future BEV models. We’re working on the assumption of a total mileage per vehicle of 200,000 kilometres.

This shift to E-mobility has drawn significant battery production to the Leipzig Region and neighbouring areas, including Daimler subsidiary Accumotive, and planned developments by Dräxlmaier, who will produce batteries for Porsche. Graphene innovator, Skeleton is building the largest supercapacitor factory in the world near Leipzig. Siemens will support Skeleton as technology partner with the joint development of a fully automated production line for the new factory and the digitalization of the entire value chain.

Why Leipzig for Automotive and Future Mobility?

So what does Leipzig offer British companies that the more familiar big German cities cannot?

  1. More available sites with the room to expand and grow
  2. More value for money and competitive operating costs
  3. More incentives and government support
  4. More choice of skills and talent from Germany’s fastest growing city
  5. More opportunities to collaborate and test innovative products and services

Cutting Edge Research and Development

Institutions such as the Leipzig Plastics Centre (Kunststoff-Zentrum, KUZ) and the nearby Fraunhofer Institute for Machine Tools and Forming Technology (IWU) are available as regional research partners and sources of the significant impetus for innovations in the automotive industry from the application of AI to the future of 3D printing and use of novel bio-materials.

The Leipzig University of Applied Sciences (HTWK) researches electromobility, energy efficiency and production technology. HTWK Leipzig cooperates with international partners on mobility issues including teams in the UK such as Universities of Edinburgh Napier; West of Scotland; Lincoln; Bolton; and Oxford Brookes.

The Leipzig Graduate School of Management (HHL) has chairs for entrepreneurship, technology transfer and IT-supported logistics. Last but not least, the Logistics Living Lab – the logistics laboratory of the University of Leipzig – provides an excellent environment for fostering innovation and creativity through cutting edge research and development work, especially around the concept of Smart Last-Mile Logistics (SMile).

The City of Leipzig’s participation in 2050 CliMobCity, an EU-wide smart mobility action plan, has expanded the charging infrastructure to make the city one of Germany’s most EV-friendly locations. As one of the designated Federal ‘Digital Hub’ locations, Leipzig also houses a Smart Infrastructure Hub bringing together scientists, entrepreneurs and corporates to work on new energy and urban planning initiatives.

Dr Jens Katzek, managing director of the Leipzig-based Automotive Cluster of East Germany (ACOD), says that people form a vital part of the e-mobility equation in the region. “We have developed our organisation over the last few years,” he says of ACOD. “I don’t know any region in Germany which has this combination of qualifications and expertise so close by.

For British companies looking for easier access to the EU market, Leipzig is a place that hits the sweet spot of a young and growing talent pool; established cluster of future mobility investments; and a warm welcome from the team at Invest Region Leipzig who can provide bespoke information and network introductions that can open doors and facilitate your expansion in Germany.