Categories: Energy / General Market Commentary
Topics: General Energy / General Market Commentary

Europe jump-starts effort to take lead in battery arms race

Vasteras’s role in electrical technology started almost two centuries ago. Now the Swedish town — birthplace in 1833 of ASEA, a maker of lights and generators that became part of Swiss-Swedish engineering group ABB — hopes to be part of a modern energy revolution.

Northvolt, a start-up that plans to produce lithium ion batteries, on Friday announced it would build a €100m demonstration line and research facility in Vasteras. Peter Carlsson, Northvolt founder and chief executive, said the site was “the first step in our longer journey”: building a plant to produce 32 GWh of lithium ion battery capacity annually and rival the Asian giants that dominate the battery arms race.

Northvolt is one of 80 stakeholders in the European Battery Alliance, an initiative launched last year by Maros Sefcovic, European Commission vice-president in charge of energy, to accelerate battery production in the EU.

Officials see battery technology as a strategic requirement for Europe, which has not managed to create the array of digital technology giants that the US has, and whose early lead in production of solar panels has been overtaken by companies in China.

Battery technology for vehicles is viewed as particularly important if one of Europe’s most important industries is to emerge from the shadow cast by the VW “dieselgate” scandal and remain at the heart of the region’s industrial base.

“What [has been] really missing is the feeling that this was very important from the point of view of the new EU industrial policy,” said Mr Sefcovic. “If the engine of the combustion car was the most precious part of the car, in future it will be batteries and software.”

Electrification of transport is an important part of meeting the EU’s commitments to the Paris climate accord, with tighter carbon emissions standards for passenger vehicles and trucks. Some European cities struggling with air quality are considering bans on vehicles with conventional combustion engines.

Batteries will also be needed to store energy as power generation — shifting rapidly away from fossil fuels — relies more on intermittent renewable sources. 

Global demand for batteries to power cars is expected to rise from under $10bn to $60bn by 2030, according to Goldman Sachs. Japan’s Panasonic is the world’s largest producer and China is building more than half of the new battery factories, according to Simon Moores, head of Benchmark Mineral Intelligence, a research group that monitors the lithium ion battery market. Goldman Sachs expects Asia to continue to dominate the market.

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