Varta goes bankrupt: its crown jewel escapes the shipwreck

Varta files for insolvency: break-up or restructuring?

The German battery and cell manufacturer Varta, based in Ellwangen, has entered an insolvency proceeding. The rescue attempt, launched less than two years ago, has failed. The company, a household name in the consumer battery market, announces that it wants to "secure its economic future" and keep operations running, but the structure of the process suggests otherwise: the consumer batteries division, the most profitable one, is excluded from the proceedings. The creditors, led by Deutsche Bank and hedge funds, seem determined to walk away with the crown jewel while the parent company and three subsidiaries sink.

The cost of manufacturing in Europe: from 1 euro to 10 cents

Behind the bankruptcy lies a cost problem that no official narrative fully explains. The gap between making a button cell battery in Germany and a Chinese white-label one is abysmal: while the European one costs around 1 euro, the Chinese one comes out at 10 cents. Amazon batteries or those from Chinese white-label brands, even if they sometimes last a bit less, cost half or less. The outsourcing of know-how and the relocation of production have left Europe with no margin.

On top of that come labour and environmental regulations that make the process more expensive. European rules, audits, wage costs (collective agreements of around 2,000 euros a month for cleaning staff, plus reduced hours for childcare) and gender equality plans all add up. The result is that a battery made in China can cost a tenth of the European one.

A valuation that doesn't add up

Varta's most solid unit is valued at 240 million euros. A figure that, put in context, is striking: footballer Lionel Messi used to earn more per year. With that money, the creditors will be able to take over the profitable business while the broken structure is dismantled. In practice, the process looks more like a break-up than a restructuring.

China did invest in R&D and education

The Varta case reflects a broader trend. While Europe and the U.S. saw China as a cheap and submissive partner, the Asian giant invested in R&D and quality education. The result is plain to see: China is advancing in battery technology, dominates the consumer battery market and is taking the production with it. Germany, the cradle of the automobile and engineering, watches one of its flagship companies collapse.

Everything runs on batteries today. And Varta, which should be at the centre of that business, has gone under. The fault, according to some analyses, is not the wind.