欧盟希望促进本土企业compete with Chinese and Korean competitors and to take battery cell production into its own hands. Germany is apparently in the center of it. The German government wants to reduce the dependence of its automakers on Asian electric vehicle (EV) battery suppliers and protect its auto industry jobs at home. Therefore, it is now trying to move further towards vast battery cell production by EU companies.Its EV battery push, however, might be coming too late.

The EU Is Now About to Make Progress with Plans for EV Battery Manufacturing

The EU has lagged far behind its economic counterparts in building up battery manufacturing capacity. Despite the world’s biggest incentives for EVs, the batteries to support the policies have been made in China and Korea. Although there are various manufacturing initiatives underway in the EU, most of them are by the Korean players. However, the EU is now about to make progress with plans for battery manufacturing to compete with those imports under the state aid rules. The European Commission has been working on both an EU Battery Alliance (EBA) and an EU Action Plan on rechargeable batteries. Initiatives include the introduction of state aid for EV battery research and billions of euro fund for EU companies to build gigantic battery factories.

• The EBA was launched by Vice President for Energy Union Maroš Šefčovič with member states and industry in October 2017. It aims to stimulate entrepreneurs to manufacture ‘Made by Europe’ batteries and to create a competitive and sustainable supply chain in Europe. Consequently, a Swedish battery supplier, Northvolt started construction in mid-2018 on the first phase of its planned battery gigafactory by partnering with Scania and BMW respectively.
• The main outcome of the EBA has been the strategic action plan for batteries adopted in May 2018. It was built on discussions with key industry stakeholders, interested member states and the European Investment Bank. Under the action plan, the EU is taking a proactive approach to major raw materials for batteries to secure its strategic independence. It is not only mapping and exploring EU resources for secondary raw materials through recycling batteries, but also trying to set up free trade agreements for raw materials from outside the EU.

Germany Will Play a Central Role in the Development of Battery Cell Production

Over the past ten years, Germany has invested around €500 million into battery cell research, but until now nothing much has come of it. Chancellor Angela Merkel has been in favour of battery cell development, but major German manufacturers have been reluctant to push ahead and are even more dependent than ever on Asian suppliers. However, recently the German government stressed the urgency of the project strongly and expressed willingness to build vast battery cell production lines in Germany with a budget of €1 billion.

At the Networking Conference Electromobility 2018 in Berlin, the German Minister of Economics Peter Altmaier announced a €1 billion investment to support local battery cell production. Then highlighted that the goal is to take 30 percent of global demand for battery cells from German and European production by 2030.

• The funding aims to reduce the country’s dependence on Asian EV battery cells and to protect German manufacturing jobs. Germany has faced a potential threat from the decline in demand for gasoline-fueled vehicles. The budget will be divided between a consortium assembled to produce lithium-ion batteries for EVs and a research facility to develop solid-state battery technology with higher energy density, longer driving range and greater safety standards.
• Most important task will be the construction of gigawatt-sized lithium-ion battery cell production lines in Germany. The German government hopes that the first production line could be available from 2021 and those batteries must be smart, have a high energy density and be easy to recycle. It is looking to have 30 percent of such production coming from Germany and Europe by 2030, with a forecast that the battery cell market in 2030 will have a global volume of €600-800 billion.

Global Li-Ion Battery Capacity Projection (GWh)

Source: Counterpoint Research

Conclusion

Chinese and Korean leaders have already been on mass production of lithium-ion batteries over the past decade. Gaining cost-competitive advantages, they plan to ramp-up huge additional production capacity accordingly. For the EU, therefore, it does not seem effective to spend significant efforts to establish new production lines on current commercial lithium-ion technology. Instead, we suggest thattheEUconcentrates on strengthening its supply chain of raw materialsthrough recycling batteries for now. Germany, meanwhile, needs to focus ona lab-scale research and pilot lines for solid-state batteriesrather than lithium-ion battery market entry.只有这样,会抓住一个机会举行dominant position in the advanced battery market optimized for the next generation vehicles for the long term.

Source: Counterpoint Research