Tesla is one of the companies expected to build battery factories in Germany. (Image Credit: David von Diemar/Unsplash)
For a second consecutive year, Europe is expected to be the world leader in electric car sales. Now, the continent has its sights set on developing a battery supply chain from scratch. Europe wants to join in on the EV battery business after conceding it to foreign companies for years. The Nordic region, Germany, France, the U.K., and Poland already have manufacturers competing to chip away at the domination of China’s Contemporary Amperex Technology and South Korea’s LG Energy Solution.
Motivated by $7.3 billion in state support along with investment plans totaling ten times that in one year, the race for a regional champion to arise has begun. Sweden’s Northvolt, Britishvolt, France’s Automotive Cells, Tesla, and Volkswagen are competing. Europe’s global battery production could increase to 31% by 2030 from 7% in 2020.
2019’s planned investments could reach $71 billion, which is triple what China spends. These totals cover the supply chain, ranging from materials and cells to assembly and recycling. European EV sales for battery-electric and plug-in hybrid models more than doubled in 2020 to 1.3 million units, overtaking China for the first time. That number could increase to 1.9 million with Volkswagen, Stellantis, and BMW making plans for new models and higher output. Ford and Volvo going all-electric also contribute to this growth. However, they require an abundance of power packs to meet their goals.
Germany, France, Italy, and the U.K. are competing in battery tech while maintaining their manufacturing facilities. Germany’s 2.6 billion euro investment in the battery industry pushes them ahead of the others. They also want Tesla, CATL, LG Energy, and ACC to build battery plants there. So far, 27 battery manufacturing facilities are expected to be built, which could produce 500 GWh of cells this decade.
Volkswagen bid $18 billion on a plan to construct six battery plants in Europe along with one in Salzgitter, Germany, and to deploy more fast-charging stations. By 2030, the European Commission hopes to have 30 million electric cars on the roads. This also means that factories in Europe would cover over 90% of battery demands.
There is a lot of pressure for European manufacturers to meet strict European Union emissions guidelines. The demand for batteries could be high enough to cause a slow-down in production by the end of the decade.
CATL plans to invest $12 billion to provide 230 GWh of capacity worldwide over the next four years. The company, which is a major supplier to nearly every major global EV brand, is set to produce in Germany this year. Meanwhile, Tesla is expected to assemble Model Ys and batteries in Germany to continue its European expansion.
Northvolt has a $14 billion supply deal with VW along with a BMW one. It’s planning to manufacture cells at the Skelleftea plant by the year’s end. Northvolt’s goal is to hold onto 25% of Europe’s battery market by 2030. Later this year, Britishvolt is expected to begin construction of a $3.6 billion factory in northeast England. It plans on utilizing hydropower from Norway and wind power from the North Sea. It could be operational by 2023.
Raw materials for EV batteries are becoming rare as companies and governments deal with shortages due to higher demand for EVs. However, there’s a catch. China is hoarding rare earth and important minerals for its use. As China controls more of those metals, battery prices continue to rise. This means it’s cheaper to develop them in China than in Detroit.
The United States has numerous rare earth deposits. USA Rare Metal owns one. The Round Trip Project in Hudspeth County, Texas, consists of lithium and other metals used in EV batteries. There is only one rare earth mine in the U.S., which belongs to MP Materials in Mountain Pass, California. Those minerals go to China.
The U.S. is also behind on natural resources used to power Tesla vehicles. Even though the batteries are produced in the United States, the metals are dependant on China. Without China metals, there are fewer EVs.
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