European carmakers are racing to secure battery-making technologies amid government support in the formsubsidies worth 3.2 billion euros (KRW 4.18 trillion) for the EV battery business from the EU.
However, it remains just how long it would take the carmakers to mass produce the batteries, and whether they can be successful at all.
According to both industry sources and the foreign media on Dec. 13, PSA Group’s Opel Autmobile decided to build a 64GWh battery plant in a joint effort with Saft Batteries in Kaiserslautern of Germany where Opel production lines are located.
This capacity is more than double that of Sweden’s Northvolt, which is now planning to secure 16GWh of battery capacity by 2023, to further expand to 24GWh in the future.
In June this year, Northvolt established a joint venture with Volkswagen, the world’s largest carmaker. Volkswagen recently said it would spend 900 million euros (KRW 1.17 trillion) on securing a 20% stake in Northvolt.
Meanwhile, another major European carmaker BMW is out to secure lithium, the main ingredient of EV batteries. For this, it has signed a long-term contract with China’s Ganfeng Lithium, which will be offer lithium from 2020 to 2024 to battery makers designated by BMW.
Industry sources believe his marks a step in BMW’s longer term initiative to directly manufacture EV batteries.
Batteries account for up to 40% of EV car-manufacturing costs, which is why carmakers are rushing to internalize the related technology. Furthermore, under stringent EU environmental regulations, battery production falls way behind the volume of EVs. According to market research firm SNE Research, the global EV market requires up to 916GWh of battery capacity by 2023, but the actual capacity produced is to reach about 776GWh.
“We don’t believe these activities would pose an immediate threat, especially since it takes at least KRW 10 trillion to undergo battery-making,” said one local market watcher.
He pointed out that carmakers in Europe and Japan have made similar attempts in the past, but failed. “It’s not a market that’s penetrable in the short-term,” he added.
However, industry watchers do accept that most carmakers will continue to seek to internalize EV batteries, and that they would partially achieve their goals.
“Carmakers will be able to satisfy about 20-30% of their battery demand,” said another market source. "These companies will also try to keep Asian battery markets in check, such as by strengthening quality inspections.”
The Elec is South Korea’s No.1 tech news platform.