Three of Europe’s biggest and most tech-savvy carmakers are racing to see who can best secure a foothold in the carbon fiber industry. A first for BMW, Volkswagen, and Daimler Benz, each company is either buying a stake in, or signing joint ventures with, one of the Big Four carbon fiber manufacturers.
Hexcel Corp., Toray Industries, Teijin Ltd, and SGL Carbon are the fiber producers that are enjoying the attention as well as the investment dollars. SGL is the biggest winner so far, seeing its earnings per share rocket up to twice that of its rivals.
BMW has indeed gone all out in their effort to have access to this new state-of-the-art car body material, half the weight of steel, but also twenty times as expensive. SGL has been the subject of a price war of sorts, with BMW’s large private shareholders purchasing about 30% of the company outright, after seeing VW buy a 10% portion. Going one better, BMW will jointly finance a carbon fiber manufacturing facility with SGL to produce the “plastic gold” components for its cars.
Consumers know carbon fiber from its role in bicycle races and car racing events. The ultra-light but durable wonder substance has revolutionized those contests’ vehicles. Any hockey player who has taken a stick to the face in a brawl knows the true resilience of carbon fiber. It is stronger than human bone for one thing, and makes a perfect airplane body as well. Boeing has used the substance for years, as have experimental aircraft designers and fishing rod manufacturers.
BMW’s aggressive move toward owning a major piece of a supply chain is risky, but something the company had long planned. Daimler is not jumping in so deeply, choosing instead to set up a series of joint ventures with Toray, rather than buying shares in the company directly.