European battery market will boom between now and 2030. Therefore, the scaling up of the UK’s battery manufacturing ecosystem represents a huge opportunity.
The Manufacturer sat down with Martin Walder Global VP Industry Incubation at Schneider Electric to discuss the production of EV batteries and where the UK needs to position itself moving forward.
Looking at battery cell production across the world, there are significant discrepancies in capacity. What factors have shaped the current landscape?
MW: There are several factors at play. The first being that the Chinese government have been pushing particularly hard in the last ten years to develop and push towards electric vehicle manufacturing and developing the supply chain to support this. At present, around 85% of batteries and 60% of electric vehicles are being produced in China. Korea is also very prominent in the battery manufacturing space with notably Samsung and LG.
However, European and US car manufacturers have been more reluctant to move to batteries and not been pushing anywhere near as hard as their Chinese counterparts. The electric vehicle shift disrupts the status quo of the traditional manufacturers of course, which has caused reticence, while the European governments have been late to the party in terms of offering their support. Tesla has been hugely innovative, and they are the only company that has really challenged the dominance of Asia when it comes to electric vehicle batteries.
But of course, with European governments now dictating the move to electric, and away from carbon producing vehicles, they’ve automatically forced the market’s hand towards EVs, despite the fact that the European suppliers are not really so well set up for it.
Tesla has been the clear market leader for EV sales in the UK but in 2023 their share fell to around 50% whilst the sales of Chinese EVs rose to nearly 20% leaving the remaining 30% split between all other European and US manufacturers. The truth is most European manufacturers re were not fully ready for the shift, and where they are offering electric vehicles the majority are still using batteries produced in Asia – and when you consider the battery could be 40% of the added value of the manufacture, it’s a phenomenal shift, and the car industry has been rocked in Europe. Once upon a time they owned their whole supply chain and were kings – now they’re being challenged.
Why are China further advanced than their European counterparts?
China have been active in this space for a lot longer and have invested $ billions in manufacturing plants and the supply chain capable of satisfying the demand in China and beyond. In 2023 around eight million EVs, just under 30%, were sold in China and around six million in the rest of the world! In Q1-2024 electric vehicle sales in China represented 45% of the total passenger vehicle sales so they continue to accelerate.
Locally, the Chinese market is quite saturated, so companies are investing outside of China, building plants in Poland and Hungary for example to make it easier to supply the market in Europe, the same is happening in the United States. We are also seeing the Chinese machinery manufacturers looking for business in new European battery companies as their home market is drying up.
Currently the UK has a high dependence on China, re hydrogen, chips, electrification etc. How can this situation be changed and how long would it take?
Putting Tesla aside, most European and American manufacturers had been holding back but now, supported by governments, we see a huge ramp up in investment. Initially UK and European manufacturers just need to get full ranges of EV vehicles to market, to maintain market shares, then they can concentrate on the longer term.
There’s a lot of new companies coming into the market looking for funding, and many large automotive companies have invested in several early phase companies to see who’s going to come through first with the next generation technology.
However, the plants that have been built in Europe, with Chinese technology, are not yet performing to the highest throughputs and yields. If a plant is designed to give 95% yield, but is only running at 70%, it is costing more capital than originally planned with less profitability. Also, there’s a good chance that if a plant is producing current technology, this will be obsolete in five years, which presents another challenge.
The first phase now is to produce more batteries in Europe for the vehicles we’re making here, so that we don’t have to be buying in from Asia. This will allow us to be more self-sufficient. We currently produce standard cylindrical or prismatic cells with fluid electrolytes, which is an older technology. This is applicable today, but we need to consider the next generation of technology for the longer-term future.
The real opportunity for Europe is on these next generation of batteries, particularly solid state that offer faster charging, extended ranges and are much safer. The opportunity is not just on the battery technology but on building highly efficient, automated manufacturing that can produce at the best quality and yield compared with those plants of today, but I suspect even with the engineering skills we have in Europe this will take 10-15 years.
What needs to happen for the UK to take full advantage of the expected electric battery boom?
One of the challenges we have in the UK is that the machinery market is not like it was 15-20 years ago. There are some great companies, but we need more EV battery plants and funding from the government to support the supply chains.
The money that is going into battery production now must come from what we were spending in other areas, 5-10 years ago. There have been a few recent examples of this investment including the Envision plant with Nissan and Agratas, a Tata company.
The early phases of any new projects will be using Asian technology but in the second phases we have got to start bringing in some of the more innovative European companies. This was the prime reason that Schneider Electric helped to establish the Upcell Alliance that brings together battery manufacturers, European machinery manufacturers, academic organisations and governments.
Schneider Electric working with Verkor, as a battery manufacturer, and six machinery manufacturers wanted to get a stronger European base, so put our heads together to look at what was possible and how to build the battery supply chain. We decided to get a group off the ground, which works with the government, on research and development of next generation technology. This is a long-term project and in the last 18 months it has gone from strength to strength. We’ve now got over 20 battery manufacturers involved, and Alliance has opened itself to US companies too.
Every six weeks we have conference calls where companies share what they’re working on. The Upcell Alliance also seeks government grants to support the coming together of end users and some of the machinery companies and academics to work on batteries. Physically we get together every six months in different locations, bringing in local government and supply chain.
We have been to Paris, Copenhagen, Barcelona and Milan each time working with the local governments, supply chain and research centres. The governments in Spain, Italy, Denmark and France have been very active. The French government have recently committed a further €1.5bn to a Taiwanese company, ProLogium who are building a 48GWh facility in Dunkirk.
I’d like to encourage more UK companies to get involved with the Upsell Alliance, and with other European activities, to start looking at technology to provide European and UK plants. The scale of the plants is such that European supply chain companies need to work together to deliver facilities in Europe. No one (European) company can deliver it all, is another reason why 14 of the companies involved in the Upcell Alliance got together independently to offer a pseudo turnkey battery line under the consortia name ‘Ensemble’.
Are most European countries in a similar stage in terms of EV batteries?
There’s a general interest everywhere, but Germany’s has a number of early investments by default because they have a larger automotive industry to serve. One of the early movers in Europe was Northvolt based out of Sweden, who put a plant in Sweden and now Germany and Canada. As mentioned, France are also being very proactive, they have invested in Verkor and now have ProLogium building huge plants with the French government support. In Norway, there’s some innovative players but the government doesn’t seem to be quite as supportive as some other European countries.
These gigafactories use a huge amount of power an need and complex and robust supply infrastructure, as market leader, is a space where Schneider Electric excels. The whole shift to EV in Europe means investment, not only, in manufacturing plants but in a massive network of charging station that benefits the large European suppliers, Schneider Electric, Siemens, ABB.
How rapidly is battery technology moving forward and changing?
Right now, there are a few companies working very hard on solid-state electrolyte technology which should be in vehicles by 2027/2028. The key issue here is the range of the vehicle; increasing that to potentially 800,00km and charging up to 85% in 20 minutes.
There’s a lot of different companies with slightly varying technology. But everyone is currently fighting for how to produce the next generation technology for the right price.
What impact did the Britishvolt collapse have on the UK battery market and what will the legacy of this be?
The collapse of Britishvolt hit the UK confidence straightaway, and it slowed several companies down that were that were already invested.
But it did give us something to work on. What we have learnt is if we can’t provide local technology because is that if there is high pressure on producing the 1st wave of batteries in UK then most machines will have to come from Asia. However, the plants announced will nearly always be built in multiple phases – so initially we might see 8GWh installed in a plant destined for 32, 40 or 48GWh. Whilst the 1st plants are going in this gives time to work on the next generation, that could involve more European suppliers driving for more highly automated, higher efficiency plant.
In the UK, if a manufacturing process is highly automated, you can manufacture quite cost effectively. Employing 1000’s of human in manual manufacturing tasks is just not cost effective, or long term sustainable, in a high cost economy like the UK.
For more articles like this, visit our Sustainability channel.