BMW raises stake in SGL Carbon

• BMW now owns 15.16% of carbon materials specialist SGL Carbon SE.
• BMW was vying for control over SGL with VW.
• Prior to this, BMW and SGL formed a joint venture SGL Automotive Carbon Fibers to manufacture automotive grade carbon fibre reinforced plastics (CFRPs) in USA.

Germany based SGL Group is one of the world’s leading manufacturer of carbon-based products. SGL’s involvement in the automotive industry is in the supply of automotive grade CFRPs (carbon fiber reinforced plastics), a highly sought after light weight alternative material that is slowly rising in demand as car makers look for ways to shave weight off their cars to reduce fuel consumption, exhaust emission and while improving driving dynamics. To the general public, the name SGL may not sound very familiar. Our Malaysian reader will be surprised to learn that SGL operates a plant in Malaysia – SGL Carbon Sdn. Bhd., in Banting. It however does not manufacture any automotive products, but instead manufacture graphite electrodes and cathodes, items commonly used in electric arc furnace in steel recycling plants.

Today, BMW AG announced that it has secured 15.16% stake in SGL Carbon SE, thus strengthening BMW’s influence over SGL in focusing on automotive carbon fiber materials. In 2009, BMW Group and SGL Group formed a joint venture company called SGL Automotive Carbon Fibers to build a carbon fiber manufacturing plant in Moses Lake, Washington State, USA. BMW held a 49% share in the company while SGL controlled the remaining 51%.

The story of SGL is a worthy of a serial drama. For a good part of this year, SGL have been busy courting two auto makers – VW and BMW. Based on VW’s most recent financial disclosure, VW AG owns 8.18% percent of SGL as of February 2011. Voith GmbH owns another 9.14% as of September 2011. Voith is a family run diversified industrial company and is closely linked to VW (mechanical parts supply and overseas plants construction). Early this year, Voith and VW’s subsidiary Audi AG signed a letter of intent to explore joint development of fiber-reinforced materials for automotive applications.

Meanwhile, billionaire and SGL’s Supervisory Board member Susanne Klatten (daughter of the BMW’s largest shareholder and controlling Quandt family, now married to Jan Klatten) owns 29% of SGL. Because of her Quandt family’s interest in BMW, she is of course closely aligned to BMW.

Over the past few months, speculations have been rife regarding VW and BMW’s struggle for control over SGL. However VW AG have also mentioned that while VW is interested in increasing their stake in SGL, they are however no plans to increase their shareholding beyond 10%. The latest puts BMW, combined with the share of BMW aligned Susanne Klatten, meant that BMW effectively have the strongest influence over SGL.

BMW intends to launch the i3 electric vehicle by 2013 and the i8 hybrid supercar in the near future. Both car will feature significant use of CFRP materials.

As energy supply remains a strategic concern for governments and environmental regulations for cars continue to tighten, the search for light weight yet ultra strong material will intensify. BMW is not alone in this search. Mercedes-Benz is working with Japanese carbon fibre components maker Toray for its next generation SL. Toray is also one of the leading names in carbon fibre, and they supply composite materials for the Boeing 787 Dreamliner.