Europe thinks like China in building its own battery industry
The European Union is starting to act like China when it comes to building the batteries that will drive the next generation of cars and trucks.
In the past few months, government officials led by European Commission Vice President Maros Sefcovic have joined with manufacturers, development banks and commercial lenders on measures that will channel more than $113 billion into a supply chain for the lithium-ion packs that will power electric cars.
Germany and France are prodding for action out of concern that China is racing ahead in new technologies sweeping the auto industry. With 13.8 million jobs representing 6.1% of employment linked to traditional auto manufacturing in the EU, authorities want to ensure that manufacturers can pivot toward supplying electric cars and batteries.
“We are walking the talk,” Sefcovic said in remarks to Bloomberg. “We have overcome an initial resignation that this battle would be a lost one for Europe.”
A number of trends are catalyzing the program, starting with the determination by EU nations to rein in greenhouse gases and fight climate change. They’re increasingly focused on reducing pollution from diesel engines and alarmed at the head start Chinese companies have in greener technologies. French President Emmanuel Macron in February said he “cannot be happy with a situation where 100% of the batteries of my electric vehicles are produced in Asia.”
About 57% of cars will be driven by batteries by 2040, according to BloombergNEF research.
The EU’s program is starting to work and putting Europe on track to wrest market share from China. By 2025, European companies that currently lack a single large battery maker will rival the U.S. in terms of capacity, according to forecasts from BloombergNEF. Measures that will spur investment include:
France and Germany are working on measures to channel billions of euros into the battery industry. Sefcovic has said the EC may be able to embrace the state-aid proposal as a special project by the end of October. The two nations are seeking to draw in additional support from Spain, Sweden and Poland.
The European Investment Bank gave preliminary approval in May to a $392 million loan supporting NorthVolt AB’s bid to build a battery gigafactory in Sweden after the company completed a fund raising.
The EU in May started a $112 million Breakthrough Energy Ventures fund with Microsoft Corp. founder Bill Gates and other investors to advance the energy transition, which is likely to include batteries.
The EC has gathered at least 260 companies including Peugeot SA, Total SA and Siemens AG in an alliance aimed at building capacity to make the energy storage devices in Europe.
“A year or two ago, everyone was under the impression that it was already too late for Europe,” said James Frith, an energy storage analyst at BloombergNEF in London. “But they’ve made a commitment, and Europe is in a strong position now.”
By 2025, Europe may control 11% of global battery cell manufacturing capacity, up from 4% now, according to Frith. That will pare back China’s market share and rival the U.S. command of the industry. The EC estimates the battery market may be worth $281 million a year by then.
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.