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Can Europe’s battery makers respond to demand?

As the world electrifies its power and transport systems, Europe is racing to secure its place in the growing battery market

There are currently an estimated 1.8 million electric vehicles (EVs) on Europe’s roads.3 If the European Union has its way, by the end of this decade there will be at least 30 million.4

Much of this will be driven by the European Commission’s regulations, targets and financing, which are designed to steer countries, companies and consumers in a more sustainable direction. This dramatic change is mirrored by demand.

Europe is now the biggest EV market in the world

In 2020, Europe’s EV sales overtook China’s for the first time since 2015 – to become the largest EV market in the world.5

“We now see a tremendous acceleration towards a 70% penetration of fully electric cars by 2030,” says Francisco Carranza, Vice President Sales and Marketing at Automotive Cells Company (ACC), a joint venture between Total and Groupe PSA. “The battery industry has been prompted to respond to that acceleration, with a big focus on European capabilities.”

Respondents to our survey say that the surge in transport-related battery demand is driving manufacturing growth and boosting confidence.

Surging consumer demand is helping to drive battery and battery storage manufacturing in Europe

Which of the following are driving the growth of battery and battery storage manufacturing in Europe?

Europe’s batteries: not cheaper – but better?

Almost 80% of the world’s lithium-ion battery cells are made in China6.

Unable to beat China on volume any time soon, European manufacturers are focusing their efforts on making batteries that are ultra-high-performance and sustainable. At the heart of this effort lies innovation, in which respondents expressed high confidence: 65% are confident in their R&D efforts, 63% are confident in innovative product design, and 56% are confident in their ability to scale up innovation.

Europe’s battery industry is confident it can compete

How confident are you in your company’s ability to compete in the following categories? (Extremely/very confident)

“We all understand that in order to get the risk of supply under control, we need to localise the supply chain as much as possible. Not just the assembly of cells and modules and packs, but also the active materials for the cathode and anode manufacturing.”

— Francisco Carranza Vice President Sales and Marketing, Automotive Cells Company (ACC)

Are gigafactories the answer?

R&D and manufacturing capabilities are growing quickly, with more than 20 gigafactories, which promise to deliver batteries on a large, or ‘giga’ scale, slated for development in Europe.

Lars Carlstrom, Founder and Chief Executive Officer of Italian start-up Italvolt, says the benefits of gigafactories are “far outweighing the negatives”.

“Not only will they bring confidence to the European EV market, but they will also bring much-needed jobs and reduce the carbon footprint of importing parts from around the world,” he told Automotive World in a recent interview.7

In the UK alone, six companies are involved in talks to build gigafactories8, including start-up Britishvolt, which is due to start producing battery cells by the end of 2023.

But until these plants are up and running, there is an imbalance between the projected surge in battery demand and domestic supply – not just at the manufacturing level, but also in terms of raw materials and other parts of the supply chain.

“In Europe, it's really a race to get capacity on the ground.”

ISOBEL SHELDON Chief Strategy Officer, Britishvolt

In Section 2, read more about how Europe can build a resilient supply chain