On 9 December 2019, the European Commission approved a US$3.5Bn investment of state aid to seven EU countries for research and innovation in battery technologies.
For the moment, Belgium, Finland, France, Germany, Italy, Poland and Sweden will directly benefit from the aid. The public investment is expected to unlock an additional US$5.5Bn in private investments, with the total project expected to finish by 2031.
The investments will cover the whole battery supply chain, including mining and processing of raw materials, production of advanced chemical materials, the design of battery cells and modules and their integration into smart systems, and the recycling and re-purposing of used batteries.
With new transport emissions limits looming in 2021, European regulators are providing considerable funds to push the EU’s domestic carmakers into a new transport era. While increasingly stringent emissions limits were already announced more than a decade ago, European carmakers have been rather slow to plan their transition into future low-emissions scenarios. Only three years ago, European carmakers started to source large amounts of battery cells from Asian companies to install in their electric cars, with several battery shortages occurring last year.
Though the total investment of the European Commission and private participants will amount to almost US$9Bn, according to Roskill estimates, foreign battery companies are expected to invest US$15Bn in Europe in the same timeframe. As of 2019, around 90% of the European lithium-ion automotive battery capacity belongs to Korean and Japanese companies. However, that is expected to change by the end of the next decade with domestic battery projects accounting for half of the European production capacity.
Nevertheless, significant quantities of raw and refined battery materials will be needed to feed a truly independent domestic battery industry. An estimated 150kt of cathode materials will be required annually by European-funded projects alone, around 30% of the global cathode market today. Consumption of raw materials like lithium, cobalt, nickel, manganese and graphite will amount to almost 230ktpy, a quantity dedicated exclusively to feed European Gigafactories and excluding foreign battery projects in Europe. Overall, this is a huge challenge which still needs to be tackled.
More information on the market trends of lithium-ion batteries can be found in Roskill’s 3rd Edition of the Lithium-ion Batteries: Outlook to 2028 report, published in April 2019.
Roskill’s Greenfield Battery Raw Material Projects for the 2020s report, which gives more detailed analysis of trends for the major raw materials of lithium-ion batteries (cobalt, graphite, lithium, manganese and nickel), was published in June 2019.