Europe Wants to Compete With China's Battery Production, Eventually
Wary that China might have the battery market totally cornered by the time electric vehicles become mainstream, the European Union is trying to jumpstart the industry at home. This year, the EU has started working with manufacturers and financial institutions to develop a reliable supply chain of the lithium-ion packs that have been difficult to come by.
European Commission Vice President Maros Sefcovic is targeting 100 billion euros ($113 billion) for the program, which Bloomberg said would help the EU “act like China.”
While emulating China has its pitfalls, especially if you branch out of the automotive realm, procuring a reliable source of battery cells has proven challenging for the car industry. Currently, China has the lion’s share of global battery manufacturing capabilities. The United States comes in a distant second while Europe is in fourth, just behind South Korea, with 4 percent of the market. The EU hopes to match the United States by 2025 — the year most analysts claim EV sales will truly ramp up.
However, Europe is thinking like China in more ways than one. In addition to wanting to become a major automotive battery supplier, it has also set aggressive emission targets and is promoting EVs like mad. Some municipalities have even gone so far as to designate areas that will be forbidden to internal-combustion vehicles in the future. But there are reasons for the battery push that go beyond helping Mother Earth breathe a little easier.
With 13.8 million jobs representing 6.1 percent of employment linked to traditional auto manufacturing in the EU, Europe can’t afford to fall too far behind. Toss in fears that Europe’s auto market is wheezing and examples of major manufacturers pulling out of the continent and you have yourself the start of what many are identifying as a regional crisis. Earlier this year, French President Emmanuel Macron said he wasn’t happy with a situation “where 100 [percent] of the batteries of my electric vehicles are produced in Asia.”
As a result, France and Germany (where the majority of Europe’s cars are built) are trying to accelerate the industry by any means possible. Sefcovic said the European Commission should be able to embrace the state-aid proposal as a special project by the end of October and the two nations are hoping to garner additional support from Spain, Sweden and Poland.
From Bloomberg:
The goal is to build enterprises in Europe that could supply the region’s automakers without requiring imports from the major battery manufacturing centers in Asia. Currently, Contemporary Amperex Technology Co., or CATL, and BYD Co. dominate production in China. Elon Musk’s Tesla Inc. is also building battery gigafactories in the U.S.
So far, Europe has no established battery supply chain, though it has drawn investment in local factories from Korean firms including LG Chem Ltd. and Samsung SDI Co. as well as CATL.
The new ambition of the commission is to stimulate companies big enough to supply the likes of BMW AG and Volkswagen AG, which plan a massive increase in electric car production. Across the industry, the outlook is for a rising portion of cars to run on batteries in the coming years.
The cash will be spread about liberally between manufacturers and parts suppliers, with no single entity getting more than what the EU deems to be its fair share. Economy and Energy Minister Peter Altmaier believes the move could secure the 800,000 jobs in Germany alone. “There’s going to be huge demand in Europe for battery cells,” Altmaier said on ARD Television last month. “We must have the ambition to build the best battery cells in the world in Europe and Germany.”
Speculation on jobs and manufacturing capacity aside, Europe really does need to do something about it’s battery production — especially since it’s so fixated on shifting toward electric cars. Roughly a third of an EVs value can be attributed to its battery pack and with most of that money going to Asia, it’s no surprise the region is worried.
[Image: Guteksk7/Shutterstock]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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"build the best battery cells in the world in Europe and Germany.” I thought Germany was part of Europe LOL. Seems I was wrong. On the serious note Europe not a once shoot itself in foot with all that Government intervention in free market like pushing diesel engines against will of people. That turned out to be a sheer idiocy. Do they really consider China as a role model? Do they really want to become another China?
Once upon a time Europeans thought diesel was the nirvana of their dreams. Once it was discovered that diesel's success was just a dream, now Europeans are salivating at ravaging the planet for rare earth metals, passing the consumption of energy to the processing of the raw materials in someone else's country, and then claiming "we are green" because we build the batteries of the green generation. I'm old enough to see this is merely passing off your direct environmental trash onto someone else and then you get to wear the Green Fair Prize Ribbon for not having any tail pipe emissions.