November 2021
The EU wants at least 30m electric vehicles on the region's roads by 2030—a massive increase from the 3.3m in 2020. The transition to EVs and away from internal combustion engine cars, which the bloc wants to phase out by 2035, will require a vast number of batteries, even if the most ambitious targets are not reached.

Global demand for batteries is set to increase 14-fold by 2030, according to EU's own estimates, with the region expected to account for 17% of that demand at 443GWh. The bloc's demand will surpass 200GWh per year by 2023, the European Commission estimates.

Rapid demand growth means the potential value of a European battery value chain—mining, refining, cell manufacturing, battery packs and recycling—could be €250bn (US$283bn) in 2025, according to EU-backed investment vehicle EIT InnoEnergy.

While Europe has been slower than Asia to build battery centres and is almost entirely reliant on imported battery cells, the region is undergoing a fundamental shift to put its economic interests first. Indeed, Northvolt's Swedish battery factory, set to open later this year, marks the first big European-owned production line for battery cells. It is aiming to produce 60GWh of batteries per year by 2024, outpacing Tesla's gigafactory in Nevada.

Europe, including the UK, has plans for 38 battery factories, worth about EUR40bn (US$45bn), according to Brussel-based non-profit Transport & Environment. This includes six Volkswagen facilities and some dedicated country plants, such as Britishvolt in the UK. If all 38 gigafactories make it to production, they could be delivering as much as 462GWh worth of battery cells by 2025, and 1,144GWh by 2030.

This would mark a big jump from Europe's current production capacity, which the IEA has pegged at around 35GWhpa. AME, however, estimates it is closer to 56.6GWh (or 54.7GWh if the UK is excluded), with six plants currently in operation.

Building up Europe's battery production capacity is at the heart of the region's goal to boost fading competitiveness of its industrial sector. The market share of EU industry slipped from 25% in 2005 to 15.5% in 2018, according to the European Round Table for Industry. The fact that the industrial sector accounts for more than 20% of the bloc's GDP, 80% of its exports and employs 35m people underscores the necessity of reinvigorating the sector.

The auto sector is vital to Europe’s industry. But if it has to import batteries, which account for about 40% of the cost of an EV, the region loses out on the value-added part of the production chain—not the mention the technological knowledge and independence that comes from building them.

The tide has been turning over the last few years. Europe secured a record EUR60bn in EV investment in 2019, largely as a result of Volkswagen's electric push, compared to EUR17.1bn in China. In the previous year, Europe had attracted a meagre EUR3.2bn in private and public funds, dwarfed by China's massive EUR22bn.

Northvolt was one of the first beneficiaries of the European Battery Alliance (EBA), launched in 2017, which marked a turning point in the shift towards further government intervention in industry. While Germany and France have always supported state-directed investment, the EU advocated an open market with strict controls on public subsidies.

But US technological might and rising Chinese development has prompted a rethink. The EBA was established to bolster Europe’s battery cell manufacturing capacity. In a further act of support, seven EU countries approved a EUR3.2bn (US$3.6bn) fund last year for the development of batteries through 2031. The European Commission expects it to generate a further EUR5bn (US$5.7bn) in private investment.

Sales of electric cars (BEV + PHEV) in the EU rose 112% in the first nine months of this year to 1.2m.  Electric cars comprised 48.7% of the EU's new passenger vehicle sales this year through September for a total 1.2m. This is up from a 23.9% share in the same period last year, according to AME analysis of data from the European Automotive Manufacturers Association.

European EV sales have been pushed higher by tightening emissions regulation, bans on driving combustion engine vehicles and generous subsidies as the bloc strives to become a net-zero emitter by 2050. In July, Germany—the biggest auto market in the EU—extended the grant of up to EUR9k (US$10,650) for an EV purchase that costs less than EUR04k through 2025. Meanwhile, the next generation of EU engine emission rules, known as Euro 7, are due to come into force in 2025 and are expected to fuel further adoption of EVs by making ICE cars more expensive.

The UK government has placed securing car battery investment as key to efforts to sustain the domestic auto industry. The government’s plan to ban the sale of new petrol and diesel cars by 2030 and hybrids by 2035 means vehicle manufacturers will have little choice but to make the shift to electric. Ministers have set aside GBP850m (US$1.1bn) to attract battery investment in the UK. The UK's first gigafactory—the GBP2.6bn (US$3.5bn) Britishvolt plant in Sunderland—is in talks to receive GBP200m (US$270m) of government funding.

Under the Brexit trade deal, UK car manufacturers will need 55% of the value of their EVs to be locally soured in order to export to the EU tariff-free from 2027. The battery cell has to have a local content of 65%, which increases to 70% for the battery pack. More than half of UK car exports are sent to the EU.

As European automakers expand their line-ups of electric vehicles, they are looking to play a bigger role in their battery supply chains to reduce costs and bolster resilience. Volkswagen snapped up a 26% stake in China's fourth largest battery producer, Gotion High-tech, last year for EUR1bn (US$1.1bn). Gotion sold 2.3GWh of batteries last year, just ahead of South Korea’s SK Innovation.

Meanwhile, Daimler has recently taken a 33% stake in French battery manufacturer Automotive Cells Company (ACC), a joint venture between automaker Stellantis and energy major TotalEnergies. The Mercedes-Benz parent company last year also invested US$480m for a 3% stake in China's seventh largest battery producer Farasis Energy (Gan Zhou) Co. Daimler plans to invest EUR40bn (US$47bn) to construct eight gigafactories—including four in Europe—to build out 200GWh of battery cell capacity.

Volkswagen has one of the industry’s most ambitious investments in electric vehicles. The German auto-giant is pouring EUR$30bn to build six new gigafactories in Europe over the next decade, with a targeted capacity of 240GWh. Europe accounted for 75% of VW's sales of battery electric vehicles (BEVs) in the first half of 2021 with 128,078 units, a jump of 156% from a year earlier.

 

AME Scenarios

AME expects European and UK battery production capacity to grow from a current 56.6GWh to 351.6GWh by 2026> under our 'probable scenario'. This grows to 459.7GWh under our 'possible' scenario. Factoring in all planned expansions would bring capacity to 993GWh by 2030>.  

In AME's 'probable' scenario, which includes plants currently under construction or in late-stage development, Europe would gain an additional 14 li-ion battery plants by 2026. The plants have an initial combined battery production capacity of 295GWh. If all 14 go ahead, Europe's battery production capacity could grow to 351.6GWh by the latter part of the decade.

In AME's 'possible' scenario, which includes plants at the announcement stage, another five li-ion battery facilities would come online in Europe. If these 'possible' sites go ahead, that could add a combined production capacity of 108.1GWh into the market by the late 2020s.

If planned expansions are reached at operational plants, that could see European battery production capacity grow by as much as 86.9GWh, with the biggest ramp up of 50GWh expected at LG's plant in Poland. AME expects the bulk of these expansions to come to fruition. Factoring in Envision's potential expansion to 38GWh, would boost the figure to 109.9GWh. Meanwhile, expansions at 'probable' sites could mean as much as an additional 407GWh of capacity, coming mostly from Tesla's gigafactory in Berlin. These figures, however, are much more speculative given that the sites are not yet operational.

It is worth mentioning that definitive dates are difficult to predict as it can take between two and five years for a large-scale battery plant to be built, with location as the key variable. It can then take up to five years for a facility to reach nameplate capacity.

* Capacity refers to current annual capacity for operational plants and forecast capacity for plants in development.

 

Nissan, Envision (United Kingdom) Production

Chinese battery maker Envision has announced plans to invest GBP450m (US$619m) to expand the UK's only gigafactory to a potential 38GWh—a dramatic rise from the existing 1.9GWhpa facility.

Production from the first 11GWhpa phase of the Sunderland plant expansion is set to begin in 2024 as part of a GBP1bn (US$1.4bn) partnership with Nissan. It will be completely powered by renewable energy.

Nissan will invest GBP423m (US$582m) in the venture, which will also include a battery recycling facility, and production of a new all-electric model. The investment is also being underpinned by an estimated GBP100m (US$134m) in government funding.

The Sunderland plant was opened in 2012 to make batteries for the Nissan Leaf. It was acquired by Envision when it bought Nissan’s battery business, AESC, in 2019.

Nissan wants the UK, where it first opened its plant in 1986, to be the dominant EV production centre after its Tochigi plant in Japan. UK Prime Minister Boris Johnson billed the investment as a "pivotal moment in our electric vehicle revolution and securing its future for decades to come."

 

Samsung (Hungary) Production

Samsung said earlier this year that it would invest KRW942bn (US$849m) to expand its 30GWh battery factory in Hungary. The plant, which opened in 2018, will be ramped up to 40GWh. It supplies batteries to BMW and Volkswagen.

 

LG Chem (Poland) Production

LG Chem opened its 15GWh battery plant in Wroclaw, Poland, in 2018. The European Investment Bank is financing a EUR480m (US$543m) expansion of 45GWh, while LG will finance the other 15GWh to bring production capacity to 65GWh. By the end of 2022, the plant will employ about 6,000, LG said. The company said last year it had secured KRW700bn (US$593m) in loans from Korean banks. The factory currently provides cells to automakers, including Audi.

 

SK Innovation (Hungary) Production

SK Innovation operates a 7.5GWh-capacity battery factory in Komarom, Hungary. The facility came online in the March quarter of 2020. SK said in 2018 it would invest a total of KRW840.2bn (US$710m) in the plant through 2022.

SK Innovation has an EV battery order backlog amounting to 1TWh, enough to power about 14m EVs, the company said in July. That is significantly more than the 60GWh EV battery backlog it had back in 2017.

 

Manga Energy Solution (Czech Republic) Production

Magna Energy Storage's factory producing li-Ion batteries, known as HE3DA, was opened in Horní Suchá near Havířov in September 2020. Initial annual battery production capacity is expected to be 1.2GWh, but capacity could rise to between 15-20GWh in the future. The HE3DA battery technology, which has been licensed, are used in energy storage systems and EV batteries.

 

Akasol (Germany) Production

German battery maker Akasol has opened its 1GWh ‘Gigafactory 1’ in Darmstadt, Germany. The factory will gradually expand to 2.5GWh by late 2022, and then to a possible 5GWh—which would produce enough batteries for 10k vehicles every year. The cells, which Akasol assembles into modules and packs, come from Samsung SDI, among others. Akasol supplies the Belgian bus manufacturer Van Hool and the Swedish Volvo Group.

 

Valmet Automotive (Finland) Production

Finnish engineering firm Valmet Automotive opened its EUR120m Uusikaupunki, Finland battery module and pack plant, in September, on the same site as its vehicle assembly plant. It is expected to eventually reach an annual capacity of 500k battery packs by 2024. Valmet has another battery plant in Salo, Finland, and is planning a third plant in Germany. Chinese battery giant CATL has been Valmet's third largest shareholder since 2017 when it purchased a 22% stake.

 

Northvolt, Volkswagen (Sweden) Probable

Northvolt, and joint-venture partner Volkswagen, plan to start production by the end of 2021 at their new 14GWh lithium-ion gigafactory in Skellefteå, Sweden. The plant will be ramped up to 60GWh, up from an earlier 40GWh, on the back of strong demand. Volkswagen has said that up to 40GWh of this capacity is intended for its own models, with the remainder going to other European automakers such as Volvo.

 

 

The 60GWh-capcity would enough for around 1m EVs assuming they use an average 60kWh battery pack. The plant will produce premium cells with cathodes that have a high nickel content. The plant’s energy costs are about a quarter to one-third of China’s because of the cheap supply of hydropower.

Northvolt has secured US$27bn of confirmed battery orders, including with Samsung SDI, CATL and BMW. The bulk of the orders of US$14bn are from VW. The Swedish battery maker plans to reach 150GWh in manufacturing capacity by 2030, which leaves 50GWh unaccounted for so far. Northvolt has raised more than US$6.5bn from investors since its founding by former Tesla employees in 2016. The company, which is 20% owned by VW, is targeting a 25% market share in Europe by 2030.

 

CATL (Germany) Probable

CATL's 14GWhpa, EUR1.8bn (US$2.1bn) li-ion battery plant in the German state of Thuringia is expected to start operations by the end of this year. The factory—the Chinese battery giant's first in Europe—will later expand to 24GWh. CATL will partner with German chemical giant BASF on battery materials in an effort to localise its European supply chain. Daimler and BMW have both committed to buy batteries from the plant.

 

Tesla Giga Berlin (Germany) Probable

Tesla’s Berlin gigafactory is aiming to start production this year, but AME expects the end of the March quarter to be a more realistic timeline given that it hasn't been approved yet. When it comes online, the US$7bn gigafactory is set to produce 500k EVs year and have a 50GWh annual production capacity. It could eventually ramp up to an incredible 250GWh.

The gigafactory in Grünheide would produce the company's new 4680 battery cells, CEO Elon Musk said last year. While it is nearing competition, it will take around a year before volume production is reached.

Tesla will invest up to EUR5bn (US$5.9bn) in a lithium-ion battery plant at Gigafactory Berlin, with a decision on whether the German government will chip in EUR1.1bn (US$1.3bn) expected by the end of the year. The subsidies come from the European Commission's EUR2.9bn (US$3.4bn) European Battery Innovation project.

 

BMW (Germany) Probable

BMW's new pilot plant in Parsdorf, near Munich, is scheduled to go into service in late 2022. The project is expected to cost EUR110m and employ 50 people. “The company is taking the next consistent step to penetrate the entire value creation process for battery cells in its depth,” the automaker said in a statement last year.

 

SK Innovation (Hungary x 2) Probable

SK Innovation's second 10GWh-capacity factory in Komarom, Hungary is currently being built and is expected to come online in the March quarter of 2022. It may then expand to 16GWh, the company said.

SK's third Hungarian factory, located in Ivancsa, will have a capacity of up to 30GWh. It is expected to start production in early 2024 and be fully completed in 2028. The factory will employ 2,500 workers. Initial investment is estimated at KRW 1.3tn (US$1.16bn) but is expected to rise to KRW2.6tn (US$2.3bn) by 2028. The plant is 20 minutes away from factories owned by Ford and Mercedes-Benz. Hungary has aggressively courted battery makers with major state subsidies to stem any fallout from the EV transition, given that the auto sector underpins the country's economy.

 

Britishvolt (United Kingdom) Probable

Battery start-up Britishvolt is on track to start construction of its GBP2.6bn (US$3.6bn) gigafactory in Northumberland this year. The first li-ion batteries are scheduled for production by the December quarter of 2023. Full production of around 30GWh is scheduled to begin at the end of 2027. Britishvolt is also in advanced talks with several potential customers, including Stellantis, according to sources.

The total amount of UK government funding has yet to be finalised but is expected to be between GBP200m and GBP250m.

 

Freyr (Norway) Probable

Freyr in July made a final investment decision to construct the first production line for battery cells in Rana, Norway. The plant, which will use 24M Technologies semi-solid cell technology, is expected to commence initial operations in the second half of 2022.

Freyr wants its battery factory to have a 35GWh capacity by 2025, with large-scale production aiming to start in 2023. The company wants to add another 8GWh through joint ventures in Norway and the Nordic region.

 

Morrow (Norway) Probable

Morrow is building a 42GWh battery plant in Arendal, Norway, which will provide batteries for both EVs and energy storage systems (ESS). The facility will be able to batteries for 700k high-performance EVs, according to the Norwegian firm. The factory, which will be operated with hydropower, is set to manufacture batteries for EVs and energy storage systems (ESS). It is expected to begin operations in the December quarter of 2024.

Morrow's shareholders include Agder Energi Venture, a subsidiary of Norway‘s largest energy producer Statkraft, and Danish pension fund PKA, which have poured a combined EUR470m (US$545.4m) in the firm.

 

Volkswagen (Germany) Probable

Volkswagen's second battery plant, with a 16GWh-capacity, is expected to begin operations in early 2024 in Salzgitter, Germany. It will then ramp up to 40GWh from 2025—this would be enough for 660k EVs, assuming an average 60kWh battery pack. Initially, this plant was going to be a 50-50 JV between the two, but VW opted to buy out Northvolt’s ownership of the facility before it begins operations. The plant will be powered by renewable energy.

 

Verkor (France) Probable

Verkor's gigafactory will have an initial capacity of 16GWh of battery cells per year, with plans to ramp up to over 50GWh by 2030. It is expected to open in 2024. Verkor inked an agreement in July to provide Renault, which owns a 20% stake in the battery maker, with at least 10GWh of battery cells per year to be used in its C and higher segments, and Alpine models. When the gigafactory ramps up to 50GWh, around 20GWh will be set aside for Renault. The facility plans to produce large pouch cells and smaller cylindrical cells (2170 and up).

 

Volkswagen, Gotion High-Tech (Germany) Probable

Volkswagen will partner with China's Gotion High-Tech, in which it owns a 26% stake, for its planned battery factory in Salzgitter, Germany. The plant will build unit cells for the volume segment—meaning cathodes with a high manganese content—from 2025. While no production capacity has been announced, AME estimates full-stage capacity it is likely to be 40GWh as VW intents to have six European gigafactories with a combined production capacity of 240GWh.

 

Automotive Cells Company (ACC) (France) (Germany) Probable

Automotive Cells Company (ACC) currently has two gigafactory projects in development, one in France and one in Germany. ACC is a joint venture founded in August 2020 by  Stellantis and TotalEnergies. Daimler joined as an equal partner in September 2021.

ACC's plant in Rhineland-Palatinate, Germany, is expected to have an 8GWh capacity when it starts in 2025 and ramp up to 24GWh this decade—enough battery cells for 500k EVs a year. The plant in France, with the same capacity, will be build a year later.

When full-stage capacity is reached at both plants, ACC would be able to produce 48GWh of batteries every year. ACC ultimate goal is to develop at least 120GWh of cell capacity by 2030.

 

Envision (France) Probable

Chinese battery manufacturer Envision plans to invest EUR$2bn (US$2.4bn) to build a battery plant to supply Renault. The gigafactory in France with an initial output of 9GWh by 2024 and then ramp up to 24GWh by 2030.

Valmet currently produces the Mercedes-Benz GLC SUV and Mercedes-Benz A Class. It has previously manufactured vehicles for Porsche, BMW and Fisker. The company will start manufacturing a solar-powered EV from start-up Lightyear in 2022. Chinese battery giant CATL took a 22% stake in Valmet Automotive in 2017.

 

InoBat (Slovakia) Probable

InoBat is also preparing to build a 1GWh gigafactory in Voderady, Slovakia, before scaling up to 32GWh. The site, located 40km outside of Bratislava in Voderady, is situated in the centre of Central Europe’s automotive hub, with more than 4.25m vehicles produced annually in a 500km radius from the facility. InoBat in June signed an agreement to supply batteries for SOR's new electric bus fleet. InoBat will use Siemens to digitalize its entire value chain for EV battery production.  

 

SVOLT (Germany) Probable

In November 2020, SVOLT announced plans to build a EUR2bn battery cell factory with a capacity of 24GWh in Saarland, Germany. Cell production at the factory in Überherrn is expected to start by the end of 2023. Meanwhile, modules and packs are also to be assembled from the battery cells at another site in Saarland. Up to 2k jobs will be created in the final stage, SVOLT said. SVOLT will supply PSA, now Stellantis, with battery cells with a total capacity of more than 7GWh.

 

Farasis (Germany) Possible

Daimler-backed Farasis Energy is planning to build its first European battery plant in Saxony-Anhalt, Germany. However, there have been recent reports about whether the factory, which should have commenced first phase construction by now, will actually go ahead. The Chinese manufacturer said in September that the delay had been caused by “turbulent developments in this market” and “major European projects”.

The factory was supposed to open in 2022, but now 2024 is looking like a more realistic timeframe. Farasis had intended to invest around EUR600m in the proposed 15GWh plant. Formal construction approvals have not been secured yet, but the site has been acquired. The delay won't impact delivery of contracted cell volumes to Daimler, which will come from its Chinese plant in Zhenjiang until 2024. Daimler has a 3% stake in Farasis.

 

Volkswagen, SEAT (Spain) Possible

VW's Seat unit has also made a strong pitch for the German automaker's next battery cell plant to be built near its factory in Martorell, Spain. Meanwhile, VW said in October will decide next year on the location for a planned battery cell plant in eastern Europe—with the The Czech Republic, Slovakia, Poland and Hungary in the running for one of the plants to be opened in 2027.

 

Itavolt (Italy) Possible

Itavolt is planning to build a 45GWh plans to invest EUR4bn (US$4.6bn) to build a battery production facility in Scarmagno. Once completed the facility will have a 45GWh capacity, enough for 500k EV batteries a year, Italvolt said. The first stage of the project is expected to be completed in 2024. This month, Italvolt picked Swiss engineering company ABB for early project planning. The company is founded and led by Swedish businessman Lars Carlstrom.

 

Porsche, Customcells (Germany) Possible

Luxury automaker Porsche is going into the battery business with li-ion developer Customcells to make cells for its high-performance models. The two companies are aiming for a small-scale annual capacity of 100MWh, or around enough batteries for 1k vehicles, starting in 2024. Porsche will own 83.75% of the joint venture known as Cellforce Group.

While the batteries will primarily go in Porsche vehicles, the technology will be made available to other brands in the VW group, like Lamborghini or Bugatti. Chemical company BASF will supply the cathode materials, and the anode will be silicon-based. Meanwhile, the battery cells for Porsche’s volume EV models are to come from Sweden's Northvolt, a partnership with VW.

 

Automotive Cells Company (ACC) (Italy) Possible

Automotive Cells Company is planning to build a third plant in Italy, after its facilities in Germany and France come online in 2025 and 2026, respectively. The first two plants will have an initial battery capacity of 8GWh before ramping up to 24GWh. While details have not been provided, AME estimates the Italian plant will be of a similar scale.

Stellantis—which owns one-third of ACC—plans to invest US$35.5bn through 2025 to speed up its development of electric vehicles. It is aiming to secure over 130GWh of battery capacity by 2025, and over 260GWh by 2030.