‘The vast majority of European battery production will be Asian’

Due to the scale of the energy transition, a lot more battery production capacity is needed worldwide. The EU’s ambition is that 90 percent of the batteries required in Europe are actually produced here, in order to limit dependence on other continents. That is why the European Battery Alliance was founded in 2017. However, it is now the case that European battery production is not so European at all, Reuters news agency writes on the basis of various sources. Batteries produced by Asian companies in Europe also ‘count’ for the 90 percent. Those batteries already account for a significant part of European production, and that part only seems to be growing.

The Asian battery manufacturers have a significant lead over the European. they have more know how production and are much less dependent on outside investors to build large, efficient battery factories. These are necessary in Europe for sufficient capacity, but investors are hesitant to enter into competition with Chinese parties, among others. In fact, only the Swedish Northvolt, which now produces battery cells on a large scale, is a successful European example. That company therefore concluded agreements with Volvo, Volkswagen and BMW, giving it the security of large customers.

But: Volvo, Volkswagen and BMW also have contracts with Asian parties. And they are not alone. Partly because of the ambition of the EU, those parties are planning to build factories in Europe. Meanwhile, European initiators are left empty-handed as they fail to secure the investment needed to cope with the major Asian players.

Predicted distribution of production

Reuters predicts, based on data from Benchmark Mineral Intelligence (BMI), a market watcher for the battery industry for EVs, that by 2031 some 44 percent of European battery production will be owned by Asian companies, 43 percent by European companies and 13 percent owned by American Tesla. This prediction assumes that the planned European projects will succeed. However, a data analyst from BMI indicates that it is quite possible that the Asian share will be larger. He predicts that the vast majority of European production will be in Asian hands, as some of the currently planned European projects do not get off the ground.

The European Battery Alliance is aware of the developments and emphasizes the importance of own knowledge about battery production, but also sees that Northvolt is the only advanced player so far. There are, however, other promising initiatives in Italy and England, among others, but they also need investments to be able to realize large-scale production. The currently planned European production capacity of European companies in 2031 is not even half the size of the required production capacity. That fits in with the picture that follows from the global forecast based on BMI data: two-thirds of global battery production is expected to be in Chinese hands by 2031.