European battery production at risk
More than two-thirds (68%) of lithium-ion battery production planned for Europe is at risk of being delayed, scaled down or cancelled, new analysis shows. Tesla in Berlin, Northvolt in northern Germany and Italvolt near Turin are among the projects that stand to lose the greatest volumes of their slated capacity as the companies weigh up investing in the US instead. Transport & Environment (T&E), which conducted the research, called for both EU-wide financial support to scale up battery production and faster approvals processes to capture projects at risk from American subsidies.
Battery production capacity equivalent to 18 million electric cars – 1.2 TWh – is at a high or medium risk of being disrupted or lost. Without this expansion, Europe will not be able to satisfy its battery demand in 2030 and will need to import from foreign rivals. T&E used publicly available information to assess the 50 gigafactories announced in Europe based on their finance and permits, whether they had secured a location, and the companies’ links to the US.
Germany, Hungary, Spain, Italy and the UK stand to lose the most if battery-makers change their plans. Tesla’s Giga Berlin plant has the largest volumes at risk of being delayed in Europe after the company said it will focus cell manufacturing in the US to take advantage of incentives under the Inflation Reduction Act. There is a medium risk to Northvolt’s planned gigafactory in Heide, Germany, as the company has only secured part of the funding and has not started construction. Also, Northvolt’s CEO said last October that it might delay the plant and prioritise expansion in the US.
Europe’s global share of new investment in Li-ion battery production dropped from 41% in 2021 to a meagre 2% in 2022, according to BloombergNEF. Battery investment in the US and China continued to grow, and European companies have already signalled expansion in America. T&E said that companies’ limited resources to scale up production, as well as the tight supply of raw materials, are making the US-Europe battery race a zero-sum game.
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