Battery production capacity in Europe is set for a
sharp increase in the next five years, demanding more
flexibility from regulators to ensure Europe’s
share of the industry is globally competitive.
Speaking at Fastmarkets’ Battery
Materials Europe 2019 conference on September 26-27 in
Amsterdam, Gert Meylemans, senior communications manager at the
Association of European Automotive & Industrial Battery
Manufacturers (Eurobat), told delegates that
Europe’s battery output capacity will increase to
at least 1,000GWh by 2025. It was 440GWh in 2015.
Annual turnover in the European batteries industry
is forecast to soar from $65 billion to more than $150 billion
over the same period, the association said.
According to the European Commission (EC),
"securing a sustainable supply of raw materials" will be
essential to the market’s development.
"The EU industry is far from being self-sufficient
in all [parts] of the value chain," the EC said in a paper on
the lithium-ion battery value chain and related opportunities
for Europe in July 2019, adding that "investment is essential
to respond to new opportunities presented by the [electric
vehicle (EV)] market."
The rapid escalation in output forecast by Eurobat
will see lithium-ion batteries overtake lead-acid batteries in
terms of value in Europe for the first time.
Nicolo Campagnol, senior knowledge analyst at
consultancy McKinsey & Co, told delegates in Amsterdam that
Central Europe was emerging as a major location for new cell
manufacturing plants, due to low labor costs and its proximity
to car-producing countries such as Germany.
Norway also has a strong batteries manufacturing
sector due to the low cost of energy from hydro plants and the
high rate of domestic EV adoption.
The expansion of European battery manufacturing
means new trade patterns will need to be established for
increasingly large quantities of battery minerals, including
lithium, graphite and cobalt, which are produced primarily in
China, Africa, South America, Australia and Russia and
processed in Japan and South Korea.
One way of developing secure supply chains would
be to invite recognized battery makers from Asia to set up
operations in the EU, bringing in their own sourcing and
But enticing Asian companies to set up in Europe
is likely to require incentives beyond local market
opportunities - an issue that is proving politically sensitive
for the EU, which is firmly against anti-competitive
Despite pledging its support for the lithium-ion
battery industry - stating in its July 2019 paper that the
sector represents "an opportunity for high-value job creation
and increased economic output [and] a more secure and resilient
energy system with an ambitious climate policy" - the EC has,
so far, taken a cautious approach to the sector, compared with
parallel efforts in Asia and North America.
This caution has manifested itself partly in the
EC’s refusal to relax its rules against state aid
simply to promote its growth, subjecting all plans for state
investment in battery plants to commission investigations.
On October 14, the EC announced an investigation
into Hungary’s €108 million ($120 million*)
pledge to help fund Samsung SDI’s battery cell
production expansion in Göd, Hungary, the original phase
of which was completed in 2017.
To date, state aid investigations have tended to
go the way of battery developments.
In January this year, the EC approved the Polish
government’s €36 million investment in South
Korea’s LG Chem for a new EV battery plant in the
Dolnoślaskie region of southwest Poland, near the border
with Germany, ruling that the funding was in line with EU
The new vertically integrated plant is expected to
supply batteries for more than 80,000 EVs per year in the
European Economic Area (EEA) and is LG Chem’s
second battery plant in Poland – the company having
already commenced construction of a 100,000-unit-per-year
battery plant at Kobierzyce, also in the southwest of the
country, in early 2018.
Some powerful European economies have suggested
relaxing state-aid rules for more European government
investment in key technology sectors, such as microelectronics
France, Germany, Italy and the UK launched a
€1.75 billion five-year microelectronics project last year
- a model France and Germany would like to emulate for EV
EU Competition Commissioner Margarethe Vestager
has taken a dim view of loosening restrictions on government
support, however. And she made her feelings clear when she
blocked a merger between German and French train manufacturers
Siemens and Alstom in February 2019.
"A company is not going to be competitive abroad
if it does not have any competition at home," Vestager said of
the EC’s decision to block the merger.
"Unchallenged companies are not likely to be innovative,
flexible or efficient… in the global marketplace."
Vestager’s re-election for a second
term in charge of the EU Competition Commission means the
bloc’s stance on this matter is unlikely to change
any time soon. But market participants at
Fastmarkets’ industry gathering in Amsterdam were
largely in agreement that Europe needs to do more to support
the local battery industry if it is to achieve ambitious
technological, climate and economic goals.
*Conversion made October 2019