Table of Contents
- 1 Northbolt, Europe’s ambitious project, runs aground after 7 years
- 2 Due to concerns about a funding crunch… “Let’s just receive technology transfer from China.”
- 3 **Considering the historical dominance of Asian companies in the battery market and the challenges faced by European startups like Northvolt, how realistic is the EU’s ambition to achieve strategic autonomy in battery production by 2030?**
Photo = REUTERS “The battery design, process, and equipment are all wrong. How can we expand production scale in this situation?”
Robin Jeong (CEO, photo), CEO of China’s CATL, the world’s largest battery manufacturer, once criticized European battery manufacturers for being a ‘total mess.’ It was an analysis of why European companies are unable to produce high-quality batteries. CEO Robin Jeong said, “Europe is making almost all mistakes at once.”
CEO Robin Jeong is known as ‘China’s battery king’ in recognition of his contribution to making CATL the world’s largest battery manufacturer. His criticism and ridicule occurred two months before Northvolt, a Swedish company considered the ‘hope of European batteries’, filed for bankruptcy.
Northbolt, Europe’s ambitious project, runs aground after 7 years
In 2017, the European Union (EU) joined forces to reduce dependence on Asia (especially China) and build a regional battery supply chain. The EU invested more than 6 billion euros in battery projects and research and development (R&D). As a result, we succeeded in increasing the European market share in the global battery market from 3% to 17% last year. Last year, the annual sales of the European battery industry reached 81 billion euros.
Northbolt was at the center of that hope. In addition to the symbolism of being founded by a former executive of Tesla, the world’s largest electric car company, global investors such as Goldman Sachs and Volkswagen have become clear allies. Northbolt, which had secured leading European automobile industry customers such as BMW, Volvo, and Porsche, seemed to be on a roll.
Photo = AFP However, Northvolt recently filed for bankruptcy after taking on more than $580 million in debt and using up only $30 million in remaining cash. Peter Karlsson (pictured), former CEO of Northvolt, said, “I regret continuing to expand the company while experiencing difficulties in delivering battery cells to our customers.” It was a reflection that excessive expansion led to anger.
Volkswagen’s truck division Scania was Northvolt’s largest customer, but production of electric trucks was delayed because batteries were not delivered on time. BMW also canceled an order worth 2 billion euros due to quality issues with batteries supplied by Northvolt. Northvolt’s bankruptcy is expected to have repercussions throughout Europe, including battery module and pack assembly facilities (Poland), recycling facilities (Norway), and battery cell manufacturing sites (Germany).
Bloomberg News said, “Northvolt’s bankruptcy shows that flashy support fire alone is not enough in an industry where competition is becoming fiercer and harsher.” Bloomberg columnist Kris Bryant pointed out, “Northbolt’s collapse shows that Europe is not lacking in capital or ambition, but rather in experience and execution.”
Photo = AFP Other European battery manufacturers are also at risk. This is because the financial market is tight due to the ‘electric vehicle chasm’ (temporary slowdown in demand) and the Northbolt bankruptcy. Volkswagen’s battery division Powerco is considering building only one of two production lines planned at its Salzgitter plant in Germany. French battery startup Vercor recently announced that it had just completed raising €1.3 billion in new funding to build a factory in Dunkirk.
Due to concerns about a funding crunch… “Let’s just receive technology transfer from China.”
Vercore CEO Venura Lemagnan said, “Additional procedures (for raising funds) have become stricter, including new inspections of design and equipment.” In France, ACC, a battery company supported by Stellantis, Mercedes-Benz, and Total Energy, began battery production last year. However, this year ACC put its plans to further expand its plants in Germany and Italy on hold.
European car manufacturers are turning to Asian suppliers again due to the aftermath of Northbolt. Porsche was originally supposed to receive batteries for the Porsche 718, which is scheduled to be released next year, from Northvolt, but due to this bankruptcy, it is known that it has started looking for an alternative supplier. For this reason, some predict that “Asian companies will once again compete to take the lead in the European market.”
Photo = XINHUA LG Energy Solution and SK On have factories in Poland and Hungary, respectively. CATL, which already has a factory in Germany, plans to start production in Hungary starting next year. However, Tim Bush, a battery analyst at UBS, dismissed the issue, saying, “In Europe, Korean companies have stopped expanding and Chinese companies have stopped construction.” Because of this, he pointed out that the EU authorities’ goal of having Asian manufacturers produce 90% of batteries in Europe by 2030 will be difficult to achieve.
EU authorities plan to introduce a new condition for Chinese companies to ‘establish factories in Europe and share technological know-how’ when applying for subsidies worth 1 billion euros for battery development next month. The plan is to force Chinese companies to transfer intellectual property rights (IP) to European companies in exchange for EU subsidies.
“We cannot compete with Chinese companies without benchmarking their battery supply chain dominance, large-scale manufacturing capabilities and expertise,” said Renault CEO Luca de Meo. It is pointed out that European battery startups have no choice but to continue cooperation (dependence) until they absorb the technological know-how of Asian companies.
Reporter Kim Rian [email protected]
**Considering the historical dominance of Asian companies in the battery market and the challenges faced by European startups like Northvolt, how realistic is the EU’s ambition to achieve strategic autonomy in battery production by 2030?**
## Open-Ended Discussion Questions based on the Article:
**I. The State of European Battery Production**
* The article paints a somewhat bleak picture of the European battery industry. Do you think European companies can ultimately succeed in catching up to Asian competitors like CATL, or are they destined to play second fiddle?
* What specific actions could the European Union take to foster a more robust and competitive battery industry, beyond financial investment?
* Northvolt’s collapse raises questions about the wisdom of rapid expansion in a nascent industry. At what point should a company prioritize research and development over scaling up production?
**II. The Role of Asian Companies**
* CATL’s CEO criticizes European battery manufacturers while simultaneously pushing for expansion within Europe. What are the implications of this dual approach?
* Should European countries encourage the transfer of technological know-how from Asian companies, even if it means sharing intellectual property rights? What are the potential benefits and drawbacks of this approach?
* In the long term, how do you see the relationship between European and Asian battery manufacturers evolving? Will it be characterized by competition, cooperation, or both?
**III. The Future of the European Battery Industry**
* What lessons can European battery startups learn from the failures of Northvolt and other struggling companies?
* What factors will ultimately determine which companies succeed in the long run – technological innovation, cost-effectiveness, strategic partnerships, or something else entirely?
* With the growing demand for electric vehicles, how crucial is it for the European Union to achieve its goal of establishing a strong domestic battery supply chain? What are the potential consequences if they fall short?
**IV. The Impact on Consumers and the Automobile Industry**
* Will the struggles of the European battery industry lead to higher prices for alight vehicles, delay the adoption of electric vehicles, or shift consumer preference towards Asian brands?
* How might the outcome of this competition between European and Asian battery companies impact the global automotive supply chain?
* What role can governments and policymakers play in ensuring a smooth transition to a sustainable transportation sector?
These open-ended questions are designed to stimulate discussion and encourage diverse perspectives on the complex challenges and opportunities facing the European battery industry.
