European battery revolution starts now: VDMA

The EU battery industry is estimated to add an extra 500GWh of capacity by 2030 and leapfrogging the US to become the second-largest regional producer of batteries.

"Essentially, the party for batteries is starting in Europe now," Mechanical Engineering Industry Association (VDMA) chairman Joachim Döhner said.

Global battery capacity is estimated to reach 1,200 GWh by 2030, up from 300GWh this year, according to estimates by Al Pack Group, presented at the virtual VDMA conference on 30 June.

Europe will see the largest gain in market share, increasing to 13.6pc in 2030 from 6.6pc in 2020. Europe is expected to grow faster than all other regions in 2020-25, VDMA estimates, while China will likely dominate the market at 63.1pc of total capacity in 2030 but fall from 73.7pc this year.

The US is expected to grow slightly, to 11pc, from 10.2pc this year. South Korea and Japan, which make up 6.4pc and 3.1pc of global supply, respectively, are expected to reduce their market shares to 2.8pc and 1.7pc by 2030.

Playing catch-up

Currently, no single, large European company is leading the battery industry.

Large battery-producing companies this year are South Korea's LG Chem, which accounted for 12.3pc of battery deliveries last year, Chinese firms CATL and BYD, at 32.5pc and 11.1pc, respectively, and Japanese firm Panasonic, which delivered 28.1pc of shipped battery cells last year, according to VDMA. The rest of the market was split between various smaller producers in Asia-Pacific and the US.

But this is set to change.

Several large projects are likely to open in Europe in the coming years. Northvolt, a Swedish battery maker, is expected to open two plants, one in Salzgitter, Germany, with a final capacity of 24GWh by 2024, and another in Skelleftea, Sweden, with capacity of 40GWh by 2021.

PSA, the French carmaker, plans to open a 64GWh plant split between France and Germany by 2022 and Norwegian battery producer Freyr will open a plant in the north of Norway with capacity of 32GWh by 2023.

Asia-Pacific companies are also investing in the European battery supply chain. LG Chem already has a pilot plant in Wroclaw, Poland, with capacity of 15GWh, which could increase to 65GWh later. The leading battery maker in China and the world, CATL, has plans for a 100GWh plant in Erfurt, Germany.

Much of the activity will centre around Germany. Seven of the 17 largest projects announced in Europe will be in Germany. Of the remainder, two will be in the UK, one in France, three in Scandinavia and four in eastern Europe. There are more projects planned but these are the largest in Europe.

As carmakers return from Covid-19-related lockdowns, there is a growing emphasis on a "green" recovery in Europe. The €750bn EU recovery plan placed special emphasis on ecologically driven growth after the viral outbreak. Several countries in the region have also announced national packages to support the battery market.

France has allocated about €8bn to carmakers, including an increase in subsidies for electric vehicles (EVs) to €7,000 from €6,000. In Germany, an incentive programme aimed at lower-priced EVs is set to benefit sales of the new VW ID3, which is the carmaker's flagship EV hatchback. Outside of the EU, the UK government expanded on a £1bn package of support for battery makers and outlined plans to open the UK's first giga-factory, although it provided no specific details.

By Thomas Kavanagh