Hungarian Investment Promotion Agency

Europe is lagging behind Asia when it comes to battery manufacturing capacities. We are talking about a staggering ten-fold difference. Taking into account announced projects, the gap should close, but the East will have been in the lead significantly even by 2030 (5,900 GWh vs 1,129 GWh).

According to Michael Schmidt, geologist at DERA, we must acknowledge that Europe is never going to be self-sufficient in this field. According to him: 

Most people don’t realize that it takes 5-15 years till mining projects materialize which may endanger overambitious planning.

Still, Europe’s import dependence on lithium could go down from the current close to 100% to 62-70%. Recycling is going to gain on significance only after 2030. However, it’s clear that end-of-life batteries mustn’t leave Europe, otherwise it will cause the drainage of raw materials.

The downside of cheap capital

Philippe Chain, CCO of Verkor SA emphasized that Europe wants to start a whole new battery manufacturing concept based on efficiency with the help of fully digitalized factories and standardized data flows. France’s Battery Valley is a great example that also relies on a revolutionary approach that recovers waste heat from nearby factories, and thus covers up to the half of battery production energy.

On average ROI of 8-11% can be counted on, but it can go down massively depending on commodity prices. Hopefully, by embracing the above-mentioned efficiency driven concept, profitability is going to become tech-driven rather than commodity-driven.

Evan Horetsky, chief development officer at AESC, who’s involved in building 13 gigafactories across the world, drew attention to the fact that Chinese companies had super cheap capital resources at their disposal which took a toll on efficiency and negatively impacted scrap rates. In Europe and the US where finance is a lot more expensive in spite of the EU’s Green Deal Industrial Plan and the IRA, efficiency must be the number one factor to consider.

End user awareness

Colin Mackey is MD of Rio Tinto, one of the biggest mining companies in the world, so he knows a thing or two about critical raw materials needed for making batteries. As he points out, importing, recycling more and mining more transparently are the three critical factors European members of the EV value chain must observe at all times. A transparent supply chain is also needed to make sustainability happen.

Mackey said.

According to Tom Einar Jensen, co-founder of Freyr Battery SA, when it comes to site selection in this segment, what you need is large land, cost-competitive (possibly clean) energy, talent and good infrastructure where you can get materials in and products out. Incentives are also key, though. “It all starts with political leadership, and the IRA is a poster child of that. However, finance is provided only if the value proposition is competitive.”

France launched the so-called “l’école batterie” where 1,500-1,600 people will be trained a year on how this whole industry works from low-skilled workers to engineers at the PhD level. This could be a role model for others that strive to become the champions of electrification.