Yawn. Boring business stuff ahoy. I thought this was CompleteCar, not LinkedIn**?**
Hang on, this is actually crucial stuff. You see, it’s all well and good assuming that we’ll all be ready to buy an electric car by the end of this decade, but there remains a question mark over where the batteries are going to come from. And that’s not just a question of consumer choice or sentiment — with the EU putting together its Industrial Accelerator Act (IAA), there will be minimum requirements for locally made and sourced content in major consumer products, including cars. So if we don’t ramp up our European battery production tout de suite, we could be looking at battery supply shortages.
OK, so this is serious stuff. Do we not make batteries in Europe?
We do, of course. The likes of BMW, Nissan, Renault, Stellantis, Volkswagen and many others have major battery-making factories in Europe, but there have been some high-profile failures when it comes to building so-called ‘Gigafactories’ for making batteries, so Europe still imports a huge chunk of batteries from outside the EU — mostly from China, but also from South Korea and some other major Asian producers.
So can we make enough?
Maybe. In theory, compared to the amount of batteries made in Europe today, we need to expand production by around 34 per cent — not an insignificant number — to meet the demand of what’s called the ‘IAA Scope’, which is the expected number of electric vehicles that will be eligible for state-backed support such as purchase grants or tax rebates. Given that such cars will likely be the most popular electric models, that’s important.
Will Europe make the battery grade?
Hopefully so. According to environmental think-tank Transport and Environment (T&E), if all current battery projects ‘materialise’ then we’ll be on course to meet the demand. Xavier Sol, Director of Sustainable Investments and Batteries at T&E, said: “The future of European industrial competitiveness hinges on a simple question: will high value clean tech jobs come to Europe or remain in Asia? A strong local battery value chain can deliver strategic independence and safeguard employment during a vulnerable period for the EU automotive sector, but a powerful political signal via the IAA is required to unlock this potential and de-risk private investments.”
What needs to be done?
Specifically, according to T&E, Europe needs to expand its capacity to make cathode active materials (CAM), an area in which China dominates with between 90 and 95 per cent of the global market. Speeding up investment in CAM (and pCAM, the sort of bit you make before you make the CAM) could help remove the bottleneck in European battery production. It’s not just the making of the stuff, though. Companies making CAM and pCAM — which will be tier-one and tier-two suppliers, not the car companies themselves — need a clear order book if they’re going to make the investments to ramp up production. Growing electric car sales help with that, but uncertain politicians, at both the national and EU level, when it comes to EV mandates and so on, don’t help at all. Minimum requirements for locally made CAM and pCAM in the IAA rules would also help. Get solid regulations set in stone, reckons T&E, and success will follow.
“Recent years have shown that, unfortunately, a strong European battery value chain won’t build itself - the competition from Asia is simply too large. Without smart demand-side rules for locally produced battery components, Europe risks its qualification in the race for clean tech. Building a secure, local value chain can ensure security of supply, create jobs and economic resilience,” said Sol.
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