The dip in registration of new battery EVs can be seen on all continents and experts are not sure whether the situation can be considered a market disturbance or a trend, reports Tage Erikson.
The impact on the battery gigafactories planned and scheduled is still impossible to predict as many investments are uncertain. According to the Benchmark Gigafactory Assessment, 220GWh of the 2030 gigafactory pipeline has been cancelled or postponed.
China is the undoubted number one in the EV battery business. The Chinese manufacturers, with CATL (37.6% market share) on top, could easily supply the global EV battery demand from its present gigafactories. According to the International Energy Agency (IEA), almost 80% of the European battery cell demand could be covered by local production in 2030 – the expansion plans for more than 1,500GWh/year are based on an increasing penetration of EVs in local markets.
The most pessimistic outlook lands at 630GWh. The European Battery Alliance, EBA250, founded in 2017, has set a goal of 1000GWh of sustainable and competitive batteries made in Europe by 2030. Looking at the actual situation the picture is more complex, considering that lithium-ion battery prices have been reduced by 50% in the last year due to China’s subsidised production.
Largest gigafactory
The largest battery gigafactory in operation in Europe is the 86GWh plant in Wrocław, Poland, by LG Energy Solutions, the South Korean group. The unit was inaugurated in 2016 and produces 700,000 battery units annually. The capacity is one million. Audi, BMW, Fiat, Ford, Porsche and Volkswagen purchase battery packs from the Polish factory.
The European EV market is in a sharp downturn, with registrations according to the European Automobile Manufacturers’ Association (ACEA) of battery-electric (BEV) cars down 43.9% to 92,627 units in August 2024 (compared to 165,204 the same period last year). This will make it difficult to reach the target.
Still, the problems Northvolt in Sweden (60GWh) faces could lead to an increased demand from BMW and Volkswagen for the LG unit. Northvolt has already cancelled plans for the new unit, Northvolt Fem in Borlänge, and the Polish unit Northvolt Dwa is up for sale. German Northvolt Drei and Northvolt Six in Canada are on hold. Northvolt is considered Europe’s most developed battery player, and the present crisis raises doubts about Europe as a sustainable location for battery production.
Hungary is a hot-spot for battery manufacturing in Europe thanks to moderate workforce costs and proximity to many leading car manufacturers, e.g. Volkswagen in Slovakia, and a domestic capacity of 800,000 cars/year. The two operating gigafactories of SK Innovation and its South Korean competitor Samsung (total capacity 47.5GWh) will be followed by investments from Chinese EVE Energy (28GWh)and CATL (100GWh) in 2025-26.
SK Innovation also plans two new plants (40GWh) in 2024–25, but the capacity has been reduced and the production start is postponed. BMW has announced the company will purchase the new large cylindrical batteries from EVE Energy for the so-called New Class of EVs. The plan is to supply the first new 3-series Neue Klasse with Hungarian-made batteries from the 2025 model, but the drop in demand might postpone the introduction of six other planned models.
France is also an important location for lithium-ion battery gigafactories. ACC, Automotive Cell Company, owned by carmakers Stellantis and Mercedes-Benz together with SAFT, a subsidiary of the French energy giant TotalEnergies, set up its first gigafactory (2GWh) in Nersac at the end of 2022.
The second 40GWh unit in Douvrin is scheduled to ramp up its production towards the end of 2024, but the market situation has changed the plans. ACC intends to switch to cheaper lithium-iron-phosphate (LFP) technology instead of the more advanced nickel-based NMC chemistry, to save costs.
European gigafactory boom on hold
Some of the ambitious plans for more European gigafactories have been put on hold or even cancelled. The delayed plans correspond to 158GWh, enough to power two million EVs. ACC has paused the plans for new gigafactories in Kaíserslautern in Germany (40GWh) and in Termoli, Italy (40GWh), while the Chinese company Envision will continue its plans for a 9GWh battery factory close to the Renault factory in Douai. The batteries will be used for the new Renault 4 and 5 model generation.
Prologium, the Taiwanese solid-state battery developer, will also continue to develop a lithium ceramic battery gigafactory in Dunkirk, France. The 48GWh plant is designed in cooperation with Schneider Electric of France. Prologium is not directly affected by the present over-supply of lithium-ion battery cells.
Britishvolt in the UK, founded by the Swedes Lars Carlström and Orral Nadjari, went bankrupt in January last year. The second project, Italvolt, in Italy also went bankrupt in January 2024. Also, Chinese-owned Svolt and Farasis have cancelled their 40GWh projects in Germany. Powerco of Volkswagen has abandoned its plans of a battery factory in eastern Europe, but the 40GWh unit in Salzgitter is expected to start production in 2025.
Tesla is still pushing its German 100GWh battery project forward despite some delays. The CATT 14GWh factory in Arnstadt, Germany, owned by Chinese CATL, was the first German lithium-ion battery plant. The Chinese group has revealed expansion plans, but recently announced that only half of the capacity will be realised.
In the UK, the second AESC (Envision Energy) owned 15.8GWh gigafactory in Sunderland is expected to start operations in 2025, and it has put in a planning application for a third factory. The Indian Tata Group company, Agratas, continues construction work at the 40GWh plant in Somerset. Completion is predicted for early 2026.
Norwegian Freyr has cancelled the plans of battery factories in Sweden, Finland and in Norway. The company is instead heading for the US market. Morrow batteries in Arendal, Norway, will produce the first LFP cells in its 1GWh factory at the end of 2024.
Spain is an important location for the European automotive industry. Envision AESC and Volkswagen have plans for more than 90GWh of battery capacity, but so far only Phi4tech (18GWh) in Badajoz, backed by Volkswagen-supported Chinese partner Gotion, has made some progress. Phi4tech owns Europe’s second-largest lithium mine.
China and US dominate
Of the five leading global gigafactory operators, two are Chinese (CATL, BYD), two South Korean (LG, Samsung) and one Japanese (Panasonic). Tesla is another major player with more than 100GWh US production capacity in cooperation with Panasonic, mainly in Nevada and Texas. The plans for production in Mexico have been put on hold until the US presidential election in November due to the threats to put tariffs on imported EVs.
The Inflation Reduction Act of the Biden government has accelerated the investments in US domestic battery gigafactories. All leading American automotive companies have formed alliances with battery specialists. General Motors and Samsung SDI announced in August that they will fulfil the agreement to establish two new gigafactories (27–36GWh) to be in production in 2027, one year later than planned. The companies said the delay is due to the slowdown of EV sales in the US. GM is running three battery gigafactories (45GWh each) together with LG Chem (Ultium Cells).
Ford is constructing an LFP battery plant in Kentucky with a capacity of over 80GWh. The Michigan gigafactory has been downscaled already in 2023 – the reason is the market development. Ford also scrapped the plans for a joint venture in Turkey, where the Chinese Ganfeng Lithium Group will continue its 5GWh joint venture with the Turkish group YİĞİT AKÜ.
Hyundai and LG Chem are finalising a 40GWh plant in Ohio in 2025. The companies are also planning to build a 10GWh plant in Indonesia, where the expansion plans to 20GWh have been postponed so far.
Stellantis and Samsung SDI are working on a 33GWh unit in Indiana. Plans to expand the capacity by 67GWh by 2027 are on hold. Japanese AESC cooperates with automakers Mercedes-Benz, Nissan and BMW with plans to expand the present 3GWh capacity by two 30GWh phases by 2026.
In China, CATL is keeping up the northern China gigafactory project together with automotive companies Xiaomi and BAIC. The news that CATL is cutting its lithium ore production capacity at the company’s mines is considered a sign of market saturation.
Korean growth
SNE Research, the South Korean global market research and consulting partner for rechargeable battery industries, said the combined usage of batteries made by the three major Korean companies for electric vehicles from Jan to August 2024 was higher than that from the same period of last year.
LG Energy Solution stayed in third place in the ranking with a 2.5% year-on-year growth to total 61.8GWh, while SK On took fourth place with an 8.0% growth to total 24.4GWh. Samsung SDI posted the highest year-on-year growth among the three Korean companies with 9.2% to total 21.3GWh, SNE said. On the other hand, the combined market shares of Korea’s trio were 21.1% – down by 3.4% compared to the same period of last year – it noted.
New locations for battery gigafactories pop up outside the main markets. India has seen its first 7GWh unit, to be expanded to 20GWh in 2027. Owner GoodEnough Energy said the batteries will primarily be used for energy storage. In Brazil, a 1GWh gigafactory will be expanded to 5GWh in 2028. In Asia, Tesla scrapped plans in August for gigafactories in Thailand, Indonesia and Malaysia.
Analysts say over-establishment of capacity in the market is evident, that price competition is severe for ordinary lithium-ion batteries, that the IRA in the USA has stimulated domestic battery production, and Europe is choked by battery supply that does not correspond to the EV production.
Consolidation coming
Tim Ellis, technical director at trade body Battery Council International, told BEST he believes a “huge market consolidation” is coming. “There’s just the cost of development and new plants and stuff. You’ve got to be a company of a certain size if you’re going to be in the battery business. Look at Northvolt. They spent how many billions and billions of euros up there. And frankly, in some ways they’re too small to keep up with CATL and BYD and whoever else.
“Because you’re not competing against companies, you’re competing against countries. That’s what we saw in the semiconductor industry. That’s why semiconductor assembly left Europe and the United States. It’s that Korea, Taiwan, China, those had national incentives to invest.
“Well, the way our markets work, you know, we’re not going to get trillions of renminbi or yuan to keep companies going in the red for 25 or 30 years. I mean, we just don’t operate that way.”
China subsidies changed
SNE Research has noted that in China, the state subsidy offered to batteries with high energy density has been reduced, while the number of EV models with LFP batteries, which is more competitive in terms of thermal safety and price competitiveness, has significantly increased.
In regions other than China, more EVs are adopting LFP batteries in order to have higher price competitiveness. “As the Chinese companies already predominated the LFP battery market, it is expected that they would maintain the current level of domination – almost similar to monopoly – for a while,” it said in its EV battery usage research note covering January to August 2024.
Taking the above into consideration it is likely that we will see some kind of structural changes, maybe mergers and acquisitions, and even more postponed gigafactory projects by 2027–28.
