With a number of gigafactories currently being built, Europe is becoming a growth market for battery manufacturing, which is essential to ensuring that Europe's fast-growing electric vehicles (EV) market can source locally supplied batteries, according to battery manufacturing panelists at the Bloomberg New Energy Finance (BNEF) Munich Summit May 17.
Automotive Cells Company CEO Yann Vincent told the virtual summit that the main drivers of battery demand were CO2 regulations and decisions by governments to ban internal combustion engine (ICE) vehicles earlier than forecast.
As a result, there had been a shift recently in the European EV market share, which had grown from a forecast of 45% in 2030 to 70%.
S&P Global Platts Analytics forecasts global plug-in light duty EV sales in Western Europe to rise to 6.3 million units in 2030, up from 1.3 million in 2020, while sales in Eastern Europe will reach 194,500 units, up from 20,930 in 2020.
Vincent said that, with so many EVs set to come into the European market, it was not realistic to supply 70% of the market with batteries coming from Asia.
"70% of the market, providing the market remains at its pre-COVID level of 70 billion, it means 12 million EV cars sold in 2030. For the sake of simplicity, let's say 100KWh per car - it's a bit high – but you end up with 1,200GWh demand from the European OEMs (original equipment manufacturer) at a time when the current supply is 50GWh or slightly less. We see immediately that there is a very strong need for building this capacity in Europe," Vincent said.
Palmer Automotive CEO Andy Palmer said that European battery manufacturers would need to move batteries to scale, while also ensuring net-zero carbon emissions within the manufacturing and operation of batteries.
"Obviously, that's where the Asian manufacturers have the advantage. We've got to recreate that and learn how to do it all over again," Palmer said.
Britishvolt chief strategy officer Isobel Sheldon added that an important factor was localization of the supply chain.
"One of the big challenges you've got with that is that you can't simply take a process that was developed in China and dump it in the Europe Union (EU) or the UK, because you're never going to get the permitting for it," Sheldon said.
She noted that there were tougher emission regulations in the EU and permitting requirements that had to be adhered to, which provided the opportunity to look at more efficient conversion processes and the materials that feed a cell manufacturing facility.
Location important
Sheldon added that the location of a gigafactory was also important, as it required the right kind of renewable energy to be successful.
"Site location and fundamentals and access to renewable energy is vital and if you can't get that right, you won't be fit for purpose by the middle of this decade, because there is regulation that's increasing the whole time and we have to ensure the assets we put in place now will be suitable for the next 10-15 years," Sheldon said.
FREYR EVP sales Gery Bonduelle agreed that having access to green energy, such as Norway's hydropower, was important, as energy made up a large portion of emissions during cell manufacturing.
He said that FREYR had two metrics that gigafactories should adhere to: emissions of CO2 during the production of cells and the cost, which would determine whether there was a business case for a plant.
He added that FREYR also aimed to have a sustainable supply chain.
"Our ambition is to work with partners and our suppliers also have the same ambition to provide the right metal to meet sustainability," Bonduelle said, adding that recycling and making the whole cycle sustainable was important.
"The cell is our first step, but our journey to sustainability includes beyond the cell manufacturing," he said.
Global focus
While the gigafactories are being built in Europe, they will not only look to supply the European market.
Sheldon said that Britishvolt did not just look at the supply and demand forecast for the UK, but also across Europe, as well as global growth outside of Europe.
"It's not just a European-centric view, because for the change in administration in the US, EVs will start penetrating at higher numbers," she said, adding that demand forecasts were continually climbing as auto OEMs brought their EV plans forward.
She said that if a company wanted to satisfy the significant demand that was clear in Europe, they'd have to comply to the Brexit agreement's rules of origin, which had not been a detriment for Britishvolt as a UK-based company.
"We have already built up a supply chain that is rules-of-origin complaint and will allow us to access the EU to all the car manufacturers. We foresaw this last year as a real possibility and set up our supply chain towards what we thought the rules of origin were going to be," Sheldon said.
