A few years ago, European battery manufacturers – and the German battery scene in particular – were very worried about keeping pace with the Asian market as it seemed to have seized the initial opportunity to enter and dominate the global battery market. Despite the fact that the main market switched from its Japanese origin to Korea and is now predominately based in China, it is typically hard to enter this race if you are in a completely different part of the world. And one that has many obstacles: cultural, industrial, and labour-related. Now, in 2022, we are very confident that Europe hasn’t missed its opportunity to be a big player in this industry after all. Our map of Gigafactories (see download below) shows that Europe is currently heavily ramping up its capacity for lithium-ion battery production for use in electromobility and stationary storage.
The players in the market can be divided up into three categories:
- The large Korean brands that brought their business to Europe at an early stage, led by LG in Poland, Samsung and SK On in Hungary. They were followed by China’s top-tier cell manufacturer CATL, the current global market leader, and others such as SVOLT and EVE Energy. Many more companies, especially Chinese cell manufacturers, have announced a vague commitment to set up operations by 2030.
- Automotive OEMs such as VW and Tesla are playing an increasing role in battery cell production. With the LIB becoming the new main storage system in electric vehicles, pressure has been put on all (large) OEMs. The response to this pressure seems to be ventures entering the battery market under the cloak of an OEM. Major European OEM ventures that have already announced their ambitions to produce cells are ACC as a coalition of Mercedes, Stellantis and Total, Cellforce, a German company that is a joint venture of Porsche and CUSTOMCELLS, and Volkswagen’s recent spin-off PowerCo.
- European start-ups that are making use of the wide range of funding options in Europe to support the growth of local battery production. Northvolt deserves a mention here as the first successful company of its kind, and is being followed by many more that are currently still in the planning or early construction stages, including Britishvolt, Freyr, Italvolt, Verkor and many others.
Looking at the map from the point of view of labour costs, you will recognise the natural trend of the first wave of Korean cell manufacturers (LG & Samsung) to favour the Eastern European region with its low-wage countries. SK On will be continuing this trend according to the Gigafactories that they are planning to set up in Hungary. But there are also regional start-ups, such as ElevenEs in Serbia or the recently announced Polish start-up ‘impact’. In Central Europe, Germany seems to be the favourite place to build a Gigafactory, despite having higher labour costs. This can be clearly attributed to the fact that there are many large OEMs based in the country (VW, BMW and others may follow with announcements in the coming months) and may pull the corresponding industries.The other two major regions that are pushing cell manufacture in Central Europe are (Northern) France (Envision AESC, Verkor, ACC) and the United Kingdom (Britishvolt, amte, West Midlands and Envision AESC). Both countries are profiting from OEM ventures and regional start-ups. The Nordic countries seem to attract mainly regional start-ups (Northvolt, Freyr, Morrow), mostly with low-cost production of renewable energy. Southern Europe completes the picture, again with a mix of OEM ventures and regional start-ups, both in Italy (ACC, FAAM and Italvolt) and Spain (Phi4Tech, Basquevolt and Envision AESC), which is known for its favourable labour costs.
Time will show which concept will be the most successful, and in which region, and who will drop out of the market. It is fair to say that Europe has a decent chance of becoming a substantial player in the global cell manufacturing industry. The race is on.
