Batteries: EU agrees new 2030 CO2 limits on cars, forcing automakers to reassess EV targets

EV electric vehicle

Representatives of the European Parliament and EU countries agreed new emissions limits late last Monday evening following weeks of negotiations. Despite having different individual CO2 targets, the parties managed to make a final agreement—any new cars sold from 2030 will have to emit 37.5% less CO2 on average compared to 2021 levels of 95g CO2 per Km.

The European auto industry association ACEA said the new 2030 targets were “totally unrealistic”, however, and warned that they put jobs at risk and called on member states to invest in charging infrastructure for electric vehicles (EVs), according to Reuters. Countries like France, Spain and Sweden, with a large auto-making industry, argued that stricter rules would help the sector maintain its global competitiveness.

Roskill view

After the EU meeting, Volkswagen (VW) CEO Herbert Diess admitted that the company’s plans for EV mass production would be insufficient amid tougher-than-expected EU CO2 targets. Mr Diess stated: “This is more than the 30% Volkswagen expected (…) and would translate into a share for EVs of more than 40% of its expected total vehicle sales in 2030”.

VW, Europe’s largest carmaker, will invest around USD$34Bn for the next five years to mass produce EVs and, thus, comply with stricter CO2 limits. Mr Diess also expressed the need for additional battery cell and battery factories. Roskill’s automotive model estimates Volkswagen Group and its brands to require 46.4GWh of battery capacity by 2025. This would translate into approximately 6,700t of lithium, 22,000t of nickel and 4,800t of cobalt by the same year.

The value of long-term battery contracts for European carmakers stands at USD$77Bn, end-2018. Some European automakers have already prepaid a large portion of these contracts, signalling a firm commitment towards their electrification strategy and their battery suppliers. In July 2018, BMW paid USD$419M upfront to CATL for the batteries of its BMW-Brilliance Chinese joint venture. The payment was part of a USD$4.7Bn global battery contract between the German automaker and the Chinese battery maker.

Given the commitment of BMW and the demand prospects from the European auto industry, CATL will also build a battery cell factory in Erfurt, Germany. Around USD$1.7Bn of the BMW global battery contract will specifically come from this plant. CATL’s factory is scheduled to produce 14GWh of lithium-ion batteries per year by 2022. CATL Chairman Robin Zeng said: “We want to supply all the OEMs (manufacturers) in Europe” and “if the Thuringia (Erfurt) project is successful then we can consider other locations.”

Roskill’s NEW Lithium-ion Batteries: Market Development & Raw Materials 2018 report is due to be published in Q1 2019. Click here to download the brochure and sample pages, or to access further information.