2023-09-13 18:32:27
By 2030, Europe is expected to be able to produce 17.9 million car batteries per year. These are the estimates of the 31 gigafactory projects under construction in the Old Continent, which add up to a capacity of 894 GWh.
These immense figures, difficult to imagine, are still below the passenger cars that were manufactured in the region in 2019: 18.7 million vehicles. In theory, if these data were reached again, Europe would be able to self-sufficiently supply a completely zero-emissions industry for the new decade. However, since the outbreak of the pandemic, whether similar production data will be repeated is unknown. In 2022, the total amounted to 13.7 million units, a decline – the fourth consecutive – of 1% compared to the previous year.
Although production figures are not expected at pre-pandemic levels and what is projected to date is close to the annual terawatt hour (TWh), there are analysts who estimate that this overwhelming capacity is not sufficient for the demands of the community market. This is the case of McKinsey, which in its 2019 report ‘Forecasts for European battery manufacturing for electric vehicles’, predicts that around 1.5 TWh would be needed to satisfy demand.
While forecasts for a pre-Covid world must be taken with caution in one that has already seen the magnitude of its consequences, some manufacturers have admitted that they will need more capacity than originally planned. This is the case of Stellantis, the Franco-Italian-American group that includes everything from Peugeot to Maserati to Jeep.
The consortium, through ACC – its joint-venture with Mercedes-Benz and Total Energies – had planned the construction of three factories, in Douvrin (France), Kaiserslautern (Germany) and Termoli (Italy). The gala began production last May, while the other two will do so in 2025 and 2026, respectively. Each assembly line has a capacity of 8 GWh per year, so they can manufacture while expanding up to their final rate of 40 GWh.
Stellantis aims to manufacture five million zero-emission vehicles in 2030. To reach that figure, the group’s managers know that they will need more factories and to be closer to 250 GWh per year than the 120 they have projected now. These numbers are similar to those of the Volkswagen Group, which has been clear with its intentions for Europe and aims to reach 240 GWh.
However, opening a factory is not a decision taken lightly, as you well know in Sagunto (Valencia), the third of the German consortium’s European locations. The manufacturer has its battery needs covered until 2028, but in the words of its board member, Thomas Schmall, “whether five or six factories are built will depend on the countries’ incentives.”
Battery factories
in Europe in 2025-2030
Location
In parentheses capacity
annual installed in GWh
Navalmoral
of the Mata
(30)
Own elaboration / ABC
Battery factories
in Europe in 2025-2030
Location
(In brackets
installed annual capacity in GWh)
Own elaboration / ABC
In Spain, there are four battery factory projects: Sagunto, from the Volkswagen Group, with a planned capacity of 40 GWh per year; Envision AESC, in Navalmoral de la Mata (Cáceres), with 30 GWh; Basquevolt, in Álava, with 10 GWh and Phi4Tech in Badajoz, with 10 GWh.
dangerous bets
The awarding of Sagunto occurred after a fight with the Government to receive more funds from the Transformation and Resilience Recovery Plan, intended to mitigate the economic damage caused by the coronavirus. According to internal company sources, the risk of another country interested in the factory being chosen was, for a moment, “very real.” The Volkswagen Group received 397 million euros from the first call of the Perte VEC.
The negotiations are tense and are carried out under the strictest secrecy, as it is a strategic industry with future projection. Building one of these productive milestones should translate into the economic prosperity of a region, and this entails fierce competition at various levels, which blurs the line between the business and the geopolitical.
There are multiple factors that tip the balance, but we must not forget that each battery weighs around 500 kilos, which increases its transportation cost, which must also be taken with fire precautions that are difficult to extinguish. Ideally, a battery factory is next to the plant that produces the cars that equip it.
But Schmall is right: the most determining factor is surely the facilities that governments provide. Joe Biden’s in the US approved the ‘Inflation Reduction Act’ (IRA) in 2022, whose budget of 430,000 million dollars includes aid for the purchase of electric vehicles of up to 7,500 dollars, as long as they are cars assembled in the country.
Additionally, more than 50% of the final value of the battery must have been created in the US. This protectionist decision has had repercussions in Europe, given that the Swedish Northvolt, one of the first indigenous projects, considered, in the words of its CEO, Peter Carlsson, stopping the construction of its plant in Heide (Germany) to concentrate on an American one. , given that it would receive a tax subsidy of about 800 million euros.
The IRA also affects companies outside the EU, such as the Norwegian Freyr. This, which had planned a 24 GWh annual plant in Orkland, called Giga Arctic, would have to pay a 10% tax when selling its accumulators on the community market, while the US offers tax discounts. Construction is, for the moment, paralyzed.
But not everything is incentives. A new technology, such as the electric car, involves risks. Choosing the wrong chemical composition or location can lead to bankruptcy. This is the case, for example, of the English company Britishvolt, which failed to secure the necessary financing to build a 3.8 billion pound gigafactory, with a projected capacity of 35 GWh.
The Chinese company Farasis, for example, will not build the 10 GWh factory it had planned in Germany either. “There have been changes in the market, and also in our priorities, so we have postponed finalizing our plans for Bitterfeld-Wolfen,” they stated in a local newspaper. The company is building a carbon-neutral plant in Ganzhou, China.
Location is essential, as the ambitious Italvolt discovered, which intended to create the largest factory in the country, but found itself with an electrical grid incapable of sustaining the energy load demanded by its gigafactory, around 1% of all electricity in the country. Italy. The company is looking for a way to solve its needs, but is encountering bureaucratic obstacles in the implementation of high voltage lines.
Today, 95% of the battery market is dominated by Asian brands, among which the Chinese CATL stands as a giant. By 2025, it aims to have a capacity of 670 GWh per year. That is: two thirds of all European production projected for 2030.
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