Asia What drives the Asian tech industry

Electromobility: Asia's battery manufacturers conquer the European market

The initiative launched by the European Commission in autumn 2017 to set up battery cell production with European companies in the automotive and chemical industries is making slow progress. The cells are the heart of the batteries, they are crucial for the range. According to EU estimates, ten to twenty large cell factories could be needed by 2025 - for a market volume of 250 billion euros.

In mid-May, EU Energy Commissioner Maros Sefcovic published an action plan aimed at promoting research and development and examining the procurement of raw materials and financing. "We have to be quick because we are in a global race," said Sefcovic in Brussels. "We have to prevent technological dependence on the competition."

Swedish start-up wants to research with support from Siemens

So far, however, there have only been three initiatives in Europe: The Swedish start-up Northvolt wants to start cell research in the coming year with the support of Siemens, ABB and the VW subsidiary Scania. A factory is expected to start production at the end of 2020, and by 2023 it is expected to have a capacity of 32 gigawatt hours with an investment of five billion dollars.

Saft in France, a battery subsidiary of the oil company Total, which Siemens, Manz and the Belgian company Solvay also support, is also just starting out with the development.

The German start-up TerraE has gathered 19 companies and research institutions behind it, including Thyssen-Krupp and Deutsche Post with their electric transporter Streetscooter. The first factory is scheduled to start work at a location in Germany at the end of 2019 - producers from Asia mostly prefer Poland or Hungary. Meanwhile, some investors are watching the entry of the Europeans with skepticism. You can still remember how billions in investments in European solar factories were thrown into the sand because they had no chance against cheap imports from China.

Not least against this background, the largest automotive supplier Bosch, after careful consideration, decided against entering into battery cell production, which the Swabians estimate would swallow up 20 billion euros in investments. "I don't think anyone in Europe can compete against the Asians," says Gerard Reid of Alexa Capital, a consultancy specializing in energy and technology companies.

Northvolt felt the reluctance of donors in its first financing round: It took longer than expected to get the 80 to 100 million euros for a pilot plant, said a company spokesman.

The majority of the funds are state development loans from the Swedish Energy Agency and the European Investment Bank, which alone contributed a good 50 million euros. According to experts, the highest profit in the value chain of a battery comes from the producers of raw materials, such as cobalt and lithium, and those who process the cells into battery systems. “There is a slight imbalance in the value chain, and that is the reason that there are still few players in Europe,” explained Northvolt founder and ex-Tesla manager Peter Carlsson.

But that will change with the Swedes' model - thanks to the use of cheap electricity from hydropower and large quantities. Northvolt and TerraE would probably each need around two billion dollars in government aid for their giant factories, explained Asad Farid, battery technology specialist at Bank Berenberg.

After all, such projects in Asia and the USA were also built with public money. In battery production, high volumes counted, said Simon Webber, Schroders' portfolio manager. “The established producers from Korea, China and Japan therefore have a clear advantage over new suppliers.

Other industry experts see better opportunities for the production of solid-state cells, which could be superior to the lithium-ion cells currently used in terms of price and quality. The Asians have yet to be caught up with here. “Everyone is developing solid cell batteries, so the gap is getting smaller and smaller,” said Diego Pavia, head of the sustainable energy company and Northvolt financier InnoEnergy.