Europe Thinks Like China in Building Its Own Battery Industry

The European Union is starting to act like China when it comes to building the batteries that will drive the next generation of cars and trucks, according to Bloomberg.

In the past few months, government officials led by European Commission Vice President Maros Sefcovic have joined with manufacturers, development banks and commercial lenders on measures that will channel more than 100 billion euros into a supply chain for the lithium-ion packs that will power electric cars.

Germany and France are prodding for action out of concern that China is racing ahead in new technologies sweeping the auto industry. With 13.8 million jobs representing 6.1% of employment linked to traditional auto manufacturing in the EU, authorities want to ensure that manufacturers can pivot toward supplying electric cars and batteries. “We are walking the talk,“ Sefcovic said in remarks to Bloomberg. “We have overcome an initial resignation that this battle would be a lost one for Europe.“

A number of trends are catalyzing the program, starting with the determination by EU nations to rein in greenhouse gases and fight climate change. They’re increasingly focused on reducing pollution from diesel engines and alarmed at the head start Chinese companies have in greener technologies. French President Emmanuel Macron in February said he “cannot be happy with a situation where 100% of the batteries of my electric vehicles are produced in Asia.“

So far, the EU’s program is starting to work and putting Europe on track to wrest market share away from China. By 2025, European companies that currently lack a single large battery maker will rival the U.S. in terms of capacity.

France and Germany are working on measures to channel billions of euros into the battery industry. Sefcovic has said the EC may be able to embrace the state-aid proposal as a special project by the end of October. The two nations are seeking to draw in additional support from Spain, Sweden and Poland.

The European Investment Bank gave preliminary approval in May to a 350 million-euro loan supporting NorthVolt’s bid to build a battery gigafactory in Sweden after the company completed a fund raising. The EIB along with the European Bank for Reconstruction & Development are working on a “raw materials investment facility“ that will help to build a supply chain for rare Earth metals needed for batteries, according to Sefcovic who says he hopes the program will be launched by the end of the year.

The EU in May started a 100 million-euro Breakthrough Energy Ventures fund with Microsoft founder Bill Gates and other investors to advance the energy transition, which is likely to include batteries. The EC has gathered at least 260 industrial companies including Peugeot, Total and Siemens in an alliance aimed at building capacity to make the energy storage devices in Europe.

The goal is to build enterprises in Europe that could supply the region’s automakers without requiring imports from the major battery manufacturing centers in Asia. Currently, Contemporary Amperex Technology, or CATL, and BYD dominate production in China. Elon Musk’s Tesla also building battery gigafactories in the U.S. So far, Europe has no established battery supply chain, though it has drawn investment in local factories from Korean firms including LG Chem and Samsung SDI as well as CATL.

Scarred by losing control of the solar industry in the last decade, Germany is leading the push. The nation was the biggest producer of solar cells in the early 2000s before Chinese companies backed by government loans took the lead. When it comes to batteries, Economy and Energy Minister Peter Altmaier is focused on the 800,000 jobs in Germany tied directly to car manufacturing. Batteries account for about a third of the value of an electric car, and without facilities to make those in Europe, more jobs will go to Asia, Altmaier has said.

Sefcovic envisions 10 or 20 “gigafactories“ making battery cells across Europe. NorthVolt intends to be one of the major battery makers, feeding BMW and other major automakers. “If we want to be one of the major manufacturers in Europe by 2030 we need to build about 150 gigawatt-hours of capacity,’’ said NorthVolt CEO Peter Carlsson. “The customer demand is so strong that we are accelerating our plans. We have taken a huge step on the way to create a new Swedish industry that will have a big impact in cutting our dependence of fossil fuels.’’