Quartz.com, Akshat Rathi
One in every 20 European workers is in the automotive industry. The EU is worried that if it doesn’t catch up on battery technology, those jobs are at risk.
“We know very clearly that the future is electric,” Maros Sefcovic, energy vice president of the European Commission, told the Financial Times (paywall). “You cannot develop new models or high-quality cars if you do not master the skills, innovation, and research link with batteries.”
That worry is not unfounded. Based on planned and existing production plants, 80% of global capacity for lithium-ion batteries is likely to be in Asia, and mainly in China.
Planned and existing lithium-ion battery production capacity
To play catchup, the EU last year launched a “battery alliance.” According to the Financial Times, it offers five kinds of funding:
Individual EU countries will be allowed to fund 100% of research, as long as they involve some cross-border projects. The EU’s Horizon 2020 research fund has set aside €200 million for battery projects; €800 million is available to finance building demonstration facilities; regions looking to promote the industry can apply for the €22 billion regional funds available; and the European Fund for Strategic Investment is available from the European Investment Bank to co-fund the billions of euros needed to build an EU equivalent of Tesla’s “gigafactory” in the Nevada desert.
That’s a lot of billions on offer, and European battery makers will need every euro of it. Northvolt, a company started by former Tesla employees, needs $5 billion to build a gigafactory in Sweden. And there are three other groups looking to build gigafactories: French battery company Saft has partnered with Siemens, Solvay, and Manz; Umicore wants a factory to make battery materials in Poland, and Germany battery maker Varta is likely to announce a collaboration with US carmaker Ford. Asian companies are getting in the game in Europe, too: South Korea’s LG Chem and Samsung are looking to build gigafactories in Poland and Hungary, respectively.
Even if all those projects come through, China, with its huge lead in both battery and electric car manufacturing, is likely to remain on top for at least the next decade, according to Benchmark Minerals.
That said, Europe’s entry in the battery race will have other benefits. The continent’s scientific and engineering expertise could push battery innovation in new directions. More solidly, its regulations could help clean up the raw-materials supply chain. For example, the most powerful lithium-ion batteries require a lot of cobalt, which often comes from conflict zones like the Congo. Europe’s regulations could push for better recycling of lithium-ion batteries, which in turn could lower the expected demand for cobalt and other materials.
And Europe’s ambition on batteries is also necessary to hit ambitious climate goals. Last week the UN published a report showing that, without drastic emissions cuts, the world could lose as much as $500 trillion by 2100—and electric cars that use renewable electricity offer the least carbon-intensive alternative to current gasoline-powered cars.
Some companies aren’t waiting for Europe to catch up on battery-making capabilities, though. In July, BMW said it plans to source $4.7 billion worth of batteries from Chinese maker CATL.