Recharging economies: The EV-battery manufacturing outlook for Europe
As uptake of electric vehicles (EVs) increases, the EV-battery market represents an opportunity for European players. We assess the potential and look at factors guiding the location of production capacity
With the dawn of electromobility and the resulting increase in EV production, the market for EV batteries has seen consistently high growth rates over the past few years. In 2017, for instance, global EV-battery manufacturers produced an estimated 30 gigawatt-hours of storage capacity, almost 60 percent more than in the previous year—a trend that is poised to continue.
This market represents a substantial—but so far untapped—potential opportunity for European battery makers and carmakers, as well as for the European economy in general. Currently, the EV-battery market is dominated by players from only three countries, all of them in Asia: China, Japan, and Korea. In 2018, less than 3 percent of the total global demand for EV batteries was supplied by companies outside these three countries, and only approximately 1 percent was supplied by European companies.
In this article, we assess the potential market for EV-battery production in Europe and look at the major benefits of having such an industry located there. Moreover, we analyze the key decision criteria for battery-cell manufacturers when deciding the location of new production capacity.
Current situation: Electric-vehicle-battery-production paradox in Europe
Thus far, the EV-battery situation in Europe has been something of a paradox: while European carmakers have struggled to secure sufficient battery supply, investments in battery manufacturing have been concentrated in Asia. Of the 70 announced gigafactories globally, 46 are based in China. Unlike China, Europe does not have a coherent industrial strategy to attract large-scale battery manufacturing. The resulting challenges for this incumbent industry and problems with planned investment have even led some of Europe’s homegrown battery manufacturers to set up shop elsewhere—namely, China. Netherlands-based Lithium Werks, which already has two plants in China, announced plans in September for another. The company says it prefers to build plants in China because the infrastructure is better, and it is easier to get the permits needed to build a factory.
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