Latecomer upgrading in relational supplier-buyer arrangements: The integration of German machinery firms in Chinese dominated electric vehicle battery production markets

Within technological transitions of the automotive industry, processing technology for the production of electric vehicle (EV) batteries is a highly relevant but thus far underresearched sector. Given the head-start of Chinese firms in developing industrial structures for battery production, this article examines the perspectives and development pathways of German machinery builders as they attempt to enter markets of EV battery production technology, currently led by Chinese machinery firms. The article does so by combining concepts of value chain governance, technological upgrading and latecomer capability gaps. It finds that despite their traditional strength in processing technology, German machinery firms tend to occupy only market niches within EV-battery production. Based on a qualitative study, building on 11 expert interviews as main empirical basis, the article argues that the main challenges stem from the differences in the timing of market entry. Chinese machinery suppliers, as early adopters, have already built strong customer relationships and accumulated tacit knowledge about processing technology. This early start provides them sustained competitive advantage and creates high market entry barriers to latecomers. Firm-level upgrading options are sensitive not only to the sector and market timing, but also to the location. In markets where leading suppliers are already well established, latecomer firms may find their upgrading options constrained, whereas in other markets, where supplier-buyer linkages are still in their formative phase, such opportunities remain more accessible.