Electric Vehicle Battery Factory Race Heats Up In Europe

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Battery sources are critical for any companies trying to to keep up in the race to field compelling long-range electric vehicles, and the competitors are already jostling for position.

From a slow start, Mercedes, VW, and BMW have changed pace and accelerated battery production plans. Tesla, Nissan, and GM are ahead in the market for 200 mile range vehicles and presumably have detailed plans in place for growing demand of their models. Any move to compete in the long-range EV race will require large-scale battery production.

EV Battery Production Plans Growing in Europe

Scania (VW Group) has announced its intention to be part of the largest battery cell manufacturer in Europe. “Northolt’s Carlsson wants the Skelleftea plant to rival US electric carmaker Tesla’s Gigafactory in the Nevada desert, and aims to produce a total battery storage capacity of 32 gigawatt-hours (GWh) a year by 2023.”

VW is gaining, but it is not racing alone. Rivals BMW and Mercedes-Benz are turning it up a notch on their own battery supplies.

“Last February Daimler CEO Dieter Zetsche ruled out investing in battery-cell production for electrified powertrains because supply was already exceeding demand. ‘The dumbest thing we could do is to add to that overcapacity,’ he said,” as reported by Automotive News Europe on January 2, 2017.

“Less than a year later, Volkswagen Group is signaling the exact opposite concern as it sizes up contenders for one of its biggest contracts in recent history: cell supplier for cars that will be underpinned by its forthcoming MEB electric platform. ‘The capacity is not there. Nobody has the capacity,’ Thomas Sedran, VW’s head of group strategy, said last month of the six largest global cell suppliers competing for the contract.”

What a difference a year makes! Or perhaps one automaker had a bad estimate of coming demand? Or perhaps it’s a marketing and communications game?

Mercedes has partnered with SK Innovation and abandoned its own in-house efforts, but as recently as last year, it appeared to take a multiple-source approach.

“Daimler quit making its own cells in December 2015 when it shut down its Li-Tec unit in Germany, citing costs,” Automotive News Europe added. “Zetsche said that Daimler had the best cell available but that this advantage was worthless because customers couldn’t feel the difference. Today, Daimler ‘pursues a competitive multiple supplier strategy’ for cells and will concentrate instead on building the pack around them at its Accumotive division in Kamenz, Germany, where it is constructing a second plant. ‘The intelligence of the battery does not lie in the cell but in the complex battery system,’ Zetsche said.”

A major South Korean manufacturer, Reuters noted in August 2017 that “SK Innovation supplies batteries to Mercedes-Benz, South Korea’s Kia Motors as well as China’s BAIC Motor Corp.”

Other reporting from November 2017: “The South Korean EV battery maker said it is set to break ground on a 840 million-won plant in Hungary in February. The 430,000-square-meter plant is capable of producing EV cells with a combined 7.5 gigawatt hours (GWh) per year, beginning in 2020.” That factory entailed an investment of approximately $777 million.

SK is also expanding domestically. “Also Thursday, SK Innovation announced its plan to expand EV battery production lines in Seosan, some 150 kilometers south of Seoul. The latest investment will raise domestic production capacity of EV cells to a combined 4.7 GWh.”

So, that’s a targeted 32 GWh from Northvolt (+ Scania/VW Group), 12 GWh from SK Innovation (7.5 GWh in Europe), and a couple other major battery producers in the wings who we’ll get to in a moment.

Rapid Increase in EV Volume Expectations

In a sign of just how rapidly the market and technology are developing, major car companies have been signaling their expectations with a sudden turn in predictions for electric vehicle sales volume. To an extent, this is a message to battery suppliers that they really do want batteries — and need production to grow quickly.

Back to the January 2nd Automotive News coverage: “Europe’s largest automaker has said it expects to sell between 2 million and 3 million full-electric cars annually by 2025. VW Group is not alone in its optimism for European, Chinese and – to a lesser extent – North American uptake of EVs. By 2020, Tesla wants 1 million EV sales globally, Nissan in Europe predicts 20 percent of its sales will be EVs and Ford forecasts that EVs will account for 15 percent to 20 percent of the total Chinese market. Moving to 2025, Mercedes predicts that 15 percent to 25 percent of the vehicles it sells globally will be powered by batteries. BMW has said the same but includes plug-in hybrids in its estimate while Ford reckons that by then about a quarter of all vehicles sold globally will get all or some of their power from a plug.”

Race for Battery Factories is On, with Most Pressure on One Producer

Given the major uptick in EV sales volume expectations, it’s understandable that there is a race to find battery sources. In Europe, the Renault Zoe is leading the sales charge, with the BMW i3, Nissan LEAF, Volkswagen e-Golf, and other top electric cars following.

The top-selling Renault Zoe, Volkswagen e-Golf, Volkswagen e-Up!, Volkswagen Golf GTE, Volkswagen Passat GTE, Volvo S90 Plug-In, Volvo V60 Plug-In, Volvo XC90 T8, Smart Electric Drive, Hyundai Sonata PHEV, Chrysler Pacific Hybrid, Ford Focus Electric, Audi A3 e-tron, Audi Q7 e-tron, Cadillac CT6 Plug-In Hybrid Chevy Volt, and Chevy Bolt all source cells from LG Chem.

Nissan is reported to be switching to LG Chem for the 2019 Nissan LEAF as well, when it joins the 200+ mile crowd with a 60 kWh LEAF. Here, Nissan is expected to be switching horses after selling its own AESC battery plant to China, which it has historically relied on for the record-holding Nissan LEAF.

LG Chem has announced expansion plans in Europe with a new factory in Poland, but it will only be the largest in Europe for a while, with Volkswagen and Mercedes/SK Innovation partnerships vying for the lead. The annual GWh capacity has not been shared, but the investment totals approximately $387 million. There was an estimated figure of 100,000 EV batteries a year thrown out there, but it has not been clear what size batteries LG Chem is talking about in those EVs.

Another major battery producer is Samsung SDI. Samsung SDI plans to supply batteries to BMW from its factory in China, but also has a factory in Hungary.

How Will the EV Battery Market Break Out?

All in all, it’s shaping up to be an exciting contest, and EV fans are eager to watch the race. A list of contestants and their battery sources from a previous CleanTechnica article is as follows:

• Panasonic (supplies Tesla and Toyota as well as certain models from Mercedes and Ford)
• LG Chem (supplies Audi, Chrysler, Ford, GM, Hyundai, Nissan, Renault, smart, Volkswagen, Volvo)
• Samsung SDI (supplies BMW, Fiat, Mercedes, Porsche)
• SK Innovation (supplies Kia and BMW)
• BYD (supplies BYD)
• AESC (supplies Nissan, but it looks like Nissan is shifting to LG Chem)
• GS Yuasa (supplies Honda, Mitsubishi, Peugeot, Citroen)

Other lists exist that help to illuminate this market, and the list of car company products and battery suppliers is changing rapidly. But we don’t really know yet where all the batteries will come from to produce electrified versions of every Mercedes-Benz model, electrified versions of every BMW model, millions of Volkswagen electric vehicles a year by 2022, 40 electrified Ford models by 2025, 20 EV models from GM by 2023, 8 fully electric Renault models and 12 more electrified Renault models, etc. The battery factories noted above show progress, but we’ll need a lot more announcements in the coming 3–5 years if those targets are to be correct. Stay tuned.

Until then, here’s an interesting table from the Hungarian financial news website Portfolio: