An estimated 250 new battery plants are expected across Europe in the next 10 years, according to an analysis from Buck Consultants International. Worldwide, the batteries market is expected to grow by around 800% in just five years – much of that will be in Europe.
The new battery plants – which will produce mostly Li-ion (lithium-ion) batteries – will mainly serve the electric vehicle (EV) market. Environmental regulations are making EVs ubiquitous around the world, with consumers increasingly interested in EV offerings and governments pushing for EVs to largely replace gas-powered vehicles.
A push to decrease dependence on Chinese battery producers will also be a major factor in the continued growth of the European battery sector.
“As there is a substantial disconnect between Europe’s electric vehicles ambitions and current batteries manufacturing capacity, we expect a wave of new plants. Not only from the battery manufacturers themselves like CATL, BYD, LG, and Panasonic – but also from their suppliers, the producers of for example anodes, cathodes, separators, and battery management systems,” said René Buck, CEO of Buck Consultants International.
First in 2018 and again this June, the EU passed a sustainability investment framework known as IPCEI (Important Project of Common European Interest), which is seen as a response to the US government’s Inflation Reduction Act. The IPCEI is (in part) designed to incentivise battery companies to set up shop in the EU, with the end goal of establishing a competitive and sustainable battery value chain in the EU.
Circularity in the European EV sector would bring a more consolidated lithium-ion battery supply chain closer to home, moving away from suppliers of raw materials and batteries in China and South America.
Recycling lithium from old batteries is also likely to be prioritised more and more: For example, the US Department of Energy just invested $2 million in a lithium-ion battery recycling plant, as part of a suite of other investments in R&D and practical solutions totaling around $192 million.
Global demand for lithium, the main component of lithium-ion cell EV batteries, has been growing significantly and shortages may be imminent. Sometimes called ‘white gold’, lithium is extracted in many countries around the world, but concerns over the environmental cost of extraction have led to political standoffs between the West and major suppliers like China.
“A successful business plan starts with an analysis of what the region really has to offer for various parties in the whole value chain. The plan should include technologic co-operation possibilities with universities, a realistic labor market analysis, an overview of small and large sites for potential investors, and a tailor-made marketing plan focused on specific target groups,” said Eric Mekenkamp, principal consultant at Buck Consultants International.
Headquartered in the Netherlands, with further operations across Europe, North America, and Asia, Buck Consultants International is a consulting firm specialised in supply chain and manufacturing chains.