China-Europe battery industry is forming a new bond, with capital, technology and market intertwined and deeply integrated. Strengthening mutually beneficial cooperation between Chinese and European enterprises will help both sides give full play to their respective advantages and take the initiative in the global new energy vehicle market.
Until 2021, the batteries of electric vehicles produced in Europe were basically from abroad. Europe has to face the fact that Asian companies occupy a major share of the global battery market. With the leading image of China battery enterprises appearing in front of global users, Europe has stepped up efforts to support local battery manufacturers, and the cooperation and competition between the two sides in the battery market are deeply intertwined. Strengthening mutually beneficial cooperation may be the right way for China and Europe to jointly deal with climate change and energy crisis.
Why did Europe give up the road of local battery production before? Why should we rearrange the relevant industrial chains? What are the difficulties in realizing this vision? Can the research and development of new batteries "overtake in corners" … … The reporter of Science and Technology Daily in Germany interviewed Zhang Lin, a professor at the Institute of Solid State Physics of the University of Hanover, Germany, and Dr Kai-Christian Moeller, a spokesman for the Hof Battery Alliance in Flawn, and other battery experts.
Opportunities are rare, and China batteries are integrated into the European market.
China’s batteries and new energy vehicles are constantly entering the European market. At the Hanover International Commercial Auto Show, Contemporary Amperex Technology Co., Limited, a battery manufacturer from China, signed cooperation agreements with a number of leading global vehicle companies and won the Daimler Truck Supplier Award. Later, the German car rental company SIXT signed an order for 100,000 new energy vehicles with BYD, an electric vehicle company in China, and the overall development momentum of China’s new energy industry was good.
According to the report of market research organization SNE Research, in the first half of 2022, the installed capacity of global power batteries was 202GWh, a significant increase of 75.65% compared with 115GWh in the same period last year. Among the TOP20 enterprises, there are 15 enterprises in China, with a total market share of 61.88%. Of the 12 power battery manufacturers with a year-on-year growth rate of over 100%, 11 are China enterprises.
Since 2017, Contemporary Amperex Technology Co., Limited has been the global power battery sales champion for five consecutive years. In the first half of 2022, Contemporary Amperex Technology Co., Limited’s power batteries accounted for 34.16% in the world. "We are proud to be an important force in promoting the electrification of the industry together with other leading global companies." Li Xiaoning, CEO of Contemporary Amperex Technology Co., Limited Overseas Business Department, said this at Hanover International Commercial Auto Show.
Contemporary Amperex Technology Co., Limited CTP and MTV innovative batteries, or BYD brand-new blade batteries, China’s power battery products have comprehensive advantages in safety performance, strength, endurance, service life, charging and discharging power, low temperature performance and so on.
At the same time, the sales of electric vehicles in Europe are growing rapidly. According to the data of European Automobile Manufacturers Association (ACEA), about one tenth of the new cars sold in the EU in the first half of 2022 are pure electric vehicles. Europe plans to phase out gasoline and diesel-powered vehicles by 2035. Europe, which still lacks local battery companies, has become the largest overseas market for power batteries in China.
The cost is too high, and European companies once gave up battery production.
Europe has always been an important base for battery research, but for cost reasons, Europe has gradually given up producing batteries in recent years.
According to experts from Daimler, Daimler was a pioneer in electric vehicle research and produced lithium batteries in Saxony, Germany as early as 2012. However, compared with other manufacturers’ batteries, its products do not have much advantage, coupled with limited production capacity and high cost. After persisting in losses for three years, Daimler closed the lithium battery production plant in December 2015.
At that time, Daimler CEO dieter zetsche said: "Daimler used to be the only German company that produced its own batteries, but today we realize that we can purchase it all over the world!"
Bosch, an automotive electronics supplier, is also one of the early companies engaged in the battery business of electric vehicles, and has many related patents. As of August, 2021, Bosch ranked third in the patent application of lithium battery industry in the world, with 2571 patent applications.
Considering the first-Mover advantage of Asian suppliers, Bosch Company assessed in 2018 that it needs to invest 20 billion euros to gain 20% market share in 2030, and whether and when the investment can be rewarded is still unknown. Therefore, after careful evaluation of market, technology, cost and investment, Bosch made a strategic decision to abandon battery production.
In an interview with a reporter from Science and Technology Daily, a senior German battery expert said frankly: "It is really a pity now that Bosch made a strategic decision to abandon battery production in 2018."
After American and European companies gave up battery production, the battery production industry gradually concentrated in Asia. This is an industry with full market competition. At present, products from many enterprises in China, Japan and South Korea are available for purchase.
Start again, Europe vigorously supports the development of local battery industry.
With the rise of new energy vehicles around the world, more and more car companies realize that the battery in electric vehicles is not just a replaceable common component. It is the core and the most expensive component of electric vehicles, and it is becoming a key factor affecting sales like the previous engines.
The European Union began to realize that establishing a complete local battery value chain in Europe is an urgent task for clean energy transformation and industrial competition. It is estimated that by 2025, the market opportunity of European battery industry will reach about 250 billion euros every year.
With the strong support of the European Union, in 2017, the European Union Battery Union (EBA) was established to promote and develop the production of local battery cells, with the participation of 14 EU member States, European investment banks and hundreds of companies and scientific research institutions. In April 2022, EBA put forward a new action plan, hoping that by 2030, the domestic battery products in the EU can meet 90% of its market demand.
The European Union has successively invested tens of billions of euros to support the research and development and production of local batteries through two "Important Projects of Common Interest in Europe (IPCEI)". Domestic battery companies have mushroomed in Europe.
Among these enterprises, the development of Swedish battery company Northvolt, German Volkswagen and French automobile battery company ACC is the most eye-catching. Northvolt’s first lithium battery factory was mass-produced in the first quarter of 2022, and the annual production capacity is expected to be 16GWh after improvement. Northvolt plans to achieve a production capacity of 150GWh by 2030.
Volkswagen started construction of the first 40GWh battery factory in Salzgit in July 2022, and plans to put it into mass production in 2025. By 2030, Volkswagen will build six large battery factories in Europe, with a total annual production capacity of 240GWh.
ACC is building the first 13GWh battery factory in France, which will be expanded to 40GWh in the future. In addition, ACC also plans to build two factories in Germany and Italy with a capacity of 40GWh. By 2030, the total battery capacity of ACC will increase to 120GWh.
At the same time, more than 40 battery manufacturers around the world announced that they would set up battery factories in Europe. Flawn’s Hof Institute for Systems and Innovation (ISI) released a report saying that according to the announcement of battery manufacturers active in Europe, the battery production capacity in Europe may reach 124GWh in 2022, 500GWh in 2025 and even 1.5TWh in 2030.
There are many challenges, and European battery companies need to overcome four major difficulties.
European companies face many challenges in producing power batteries.
The first is to overcome the difficulties of mass production.
Asian battery enterprises have generally developed from lithium battery enterprises for consumer electronics, and through years of accumulation, they have gradually solved various problems encountered in mass production. However, the self-built industrial chain in Europe is still in its infancy, and many newly established battery manufacturers lack similar experience and need to overcome more difficulties in the mass production process.
"Production experience is very important for lithium battery manufacturing. The production and debugging of lithium battery involves at least 4000 parameters, and it is not easy to achieve balanced quality control of batteries even for the same batch of products. And the same standard chemical plant, built in another place, also takes a long time to debug. The real challenge is to mass-produce millions of batteries with the least quality fluctuation. Europe still has a long way to go in this regard. " A battery expert from a German company said in an interview.
The second is to ensure the supply of raw materials.
At present, China has a high market share in the key links of battery production. This means that many materials needed by European battery manufacturers have to be purchased from China. Take Northvolt, the only local power battery manufacturer in Europe that has started mass production at present, for example, many core materials of its batteries come from China suppliers.
Europe is increasing cooperation with countries such as the United States, Canada and Australia in raw materials. But the problem is that the new supply chain must pay huge time and capital costs. For example, it will take at least 10 years to build a new raw material base from the beginning of mining, and it will take several years to reach the design capacity.
Kay Christian Muller told reporters: "When establishing battery production on the scale of GWh, it is always a challenge to ensure the safety and stability of the supply chain, which is true everywhere and under any circumstances, not just for European companies." He has been engaged in the research and development of lithium batteries for nearly 30 years, and his work in Flawn Hof Battery Alliance includes 24 research institutions, covering battery materials, module design and production technology.
Thirdly, the supporting capacity of lithium battery equipment.
The production process of lithium batteries is relatively complicated, which can be roughly divided into stages such as pole piece manufacturing, battery cell assembly, battery cell formation, testing, etc. Orders for related manufacturing equipment are gathering from head enterprises in various sub-sectors. Asian enterprises have obvious advantages in this respect and are expected to become the core equipment suppliers of new battery factories in Europe.
Take Volkswagen’s new battery factory as an example. In January 2022, Volkswagen and Bosch issued a joint statement, planning to set up a joint venture company to supply equipment for the battery factory. But in June, 2022, Volkswagen still gave the order for 40Gwh production equipment of Salzgit battery factory to the lithium battery equipment supplier in China.
Finally, participate in global market competition.
Asian battery companies are taking advantage of the time window when European battery companies have not yet formed scale production capacity to seize market share. It is estimated that by 2025, the battery production capacity in Contemporary Amperex Technology Co., Limited will reach 670GWh, BYD may reach 600GWh, and LG New Energy plans to reach 540GWh. From the upstream lithium ore and lithium salt, to the anode and cathode materials, separators and manufacturing equipment of batteries, the leading enterprises have a relatively complete layout, and are constantly carrying out technological innovation and product iteration around the new battery structure and material system.
The production of batteries is an industry that pursues scale effect extremely. Whether European local battery enterprises can expand production capacity and reduce costs in a short time is the key to their participation in market competition. Faced with a series of challenges, such as the rising price of raw materials in the upstream, the tight pressure of competitors and the strict control of purchasing prices by automakers, how to survive and develop in the brutal market competition may be the biggest problem faced by emerging battery enterprises in Europe.
Green barrier, carbon footprint threshold or a double-edged sword
In March 2022, the European Parliament passed the EU New Battery Regulation, which drives the green and low-carbon transformation of the battery industry with stricter requirements. From July 1, 2024, only batteries with carbon footprints can be put on the European market. In 2027, Europe will ban the sale of batteries that exceed the maximum carbon footprint limit. The European Union has also made it mandatory to recycle batteries and reuse metals such as nickel, cobalt and lithium to reduce the pressure on environmental protection and raw materials.
In addition, the EU will also force due diligence on the entire supply chain of batteries, including the social and environmental risks involved in the process of raw material refining, battery cell production and battery use. This series of new regulatory policies will undoubtedly benefit the layout of local battery enterprises in Europe and make up for their disadvantages in product cost.
Correspondingly, the newly-built battery enterprises in Europe attach great importance to the carbon emission of batteries in the whole life cycle from raw materials to products. According to the data of the European Transport and Environment Federation, the carbon emission of battery production of electric vehicles ranges from 61kg to 106kg CO_2e/kWh, which can account for more than 60% of the total life cycle emission of electric vehicles.
Northvolt Company emphasizes that its battery carbon footprint (about 33kg CO_2e/kWh) is only one-third of that of reference batteries in the same industry due to the use of 100% renewable energy, and Northvolt hopes to reach the goal of 10kg CO_2e/kWh by 2030.
However, there is an important premise to build a green barrier for the European battery industry, that is, the battery capacity in Europe can meet its own needs. Otherwise, these measures will increase the production costs, including those of European battery manufacturers, and the products of leading Asian enterprises will still be competitive.
Zeng Yuqun, Chairman of Contemporary Amperex Technology Co., Limited, said that based on the composition of the carbon footprint of power batteries, most of the carbon footprint can be reduced through green power, large-scale recycling and technological upgrading, and combined with carbon sinks, a zero-carbon battery can be realized. In the first quarter of 2022, Contemporary Amperex Technology Co., Limited recycled 21,000 tons of waste batteries and used them to produce 18,000 tons of precursors. In March, 2022, Contemporary Amperex Technology Co., Limited Yibin Factory obtained international certification and became the first zero-carbon battery factory in the world.
Can Europe win the first opportunity through solid-state batteries by changing the track?
Solid-state battery is an important research direction of the next generation power battery, which is expected to replace the traditional lithium-ion battery (LIB). Zhang Lin focused on the design, optimization and recycling technology of new energy materials, and was nominated for the Leibniz Prize in 2019. In an interview with the Science and Technology Daily reporter, she stressed: "For the industrialization of all-solid-state batteries, both China and Europe are currently in the primary stage."
Zhang Lin introduced the long-term accumulation of solid-state battery research in Europe. For example, BMW cooperates with SolidPower Company of the United States to develop sulfide solid electrolyte technology, and plans to launch a prototype of solid battery by 2025 and use it in production cars by 2030. Volkswagen cooperates with QuantumScape Company of the United States, focusing on the research of oxide solid electrolyte, and plans to mass-produce solid-state batteries in 2025.
"The development of all-solid-state lithium batteries in Europe mainly depends on the development of solid electrolytes. At present, the most potential electrolytes are oxides, sulfides and polymers, while borohydride and halide have also made breakthroughs in the last five years, but the advantages and disadvantages of the above-mentioned electrolytes are obvious. At present, only the ionic conductivity of some sulfide electrolytes approaches or exceeds the level of organic liquid electrolytes. Due to problems such as interface, its electrochemical stability is not satisfactory. " Zhang Lin said.
She emphasized that there is no perfect electrolyte to meet the application requirements at present, so it is necessary to improve all kinds of electrolytes to obtain good comprehensive performance. Basic research and applied research will develop iteratively. Some material systems have begun to enter the application field slowly. The experience gained in the application process will promote the development of basic research. In addition, efforts should continue to be made to explore and discover ionic conductors with new structures. Qualcomm screening calculation combined with experiments will help to discover new compounds.
In addition, she also said that as far as the oxide solid-state battery is concerned, its electrolyte has relatively high ionic conductivity and stable chemical characteristics, which is not harsh on the preparation environment and easy to be produced and applied on a large scale. However, compared with traditional lithium-ion batteries, the cost of oxide solid-state batteries is still high, and the performance needs some time to improve. Oxide solid-state batteries are most likely to be applied to high-end electric vehicles first, because customers may be willing to pay the premium for solid-state batteries in order to obtain longer cruising range and higher safety.
When it comes to semi-solid batteries, Zhang Lin said: "At present, solid-state battery enterprises in China mainly choose the research and development route of semi-solid batteries based on solid-liquid mixed electrolytes. Although adding liquid electrolyte may reduce the thermal stability to some extent, the process of mass production of semi-solid batteries with solid-liquid mixed electrolyte is more compatible with the current manufacturing technology and equipment of liquid lithium ion batteries. Considering factors such as materials and equipment, semi-solid batteries are more feasible in the short term and are already on the eve of mass production. "
Can Europe overtake in corners by developing other new batteries, such as lithium-air batteries or lithium-sulfur batteries? Kay Christian Muller is not optimistic about this. He told the Science and Technology Daily reporter: "These new battery systems are still under development, and there are still many problems when they are introduced to the market. Europe cannot rely on these battery systems to catch up with Asian battery manufacturers. "
With complementary advantages, China-EU battery industry looks forward to mutually beneficial cooperation.
The domestic battery industry in Europe is in the process of rapid development. Through policy guidance and cooperation between upstream and downstream enterprises, the battery production capacity in Europe will gradually expand around 2025 and occupy a certain global market share. At the same time, European companies are also seeking the far-reaching layout of the battery industry at different levels. For example, cooperate with battery enterprises through equity investment or joint venture, infiltrate into the upstream mineral resources of power batteries to ensure stable production capacity supply and strengthen the control of industrial chain.
Take BASF as an example. In August 2021, BASF acquired a 51% stake in Shanshan Energy, a leading lithium battery material company in China, and actively promoted cooperation with battery companies such as Contemporary Amperex Technology Co., Limited and Honeycomb Energy in the field of battery materials and recycling; In Japan and the United States, BASF has established joint ventures with old cathode material supplier Toda Industries. In Europe, BASF has built production bases for cathode active materials and precursors in Germany and Finland. BASF has quietly become one of the world’s leading suppliers of cathode active materials for lithium batteries, not only seizing a strong market advantage, but also becoming the first company with cathode material production capacity in all major markets around the world.
Let’s look at the German Volkswagen whose strategic goal is to become one of the world’s three largest battery manufacturers. In May 2020, Volkswagen invested about 1.1 billion euros to acquire a 26% stake in China battery factory Shangguoxuan Hi-Tech, becoming the largest shareholder of Guoxuan Hi-Tech. In the first half of 2022, the installed capacity of Guoxuan Hi-Tech power battery was 5.8GWh, ranking eighth in the world. Guoxuan Hi-Tech is developing the first generation of standard batteries for the public. In the battery factory built by Volkswagen, Guoxuan Hi-Tech will cooperate with Volkswagen as a technical partner in the production layout, equipment deployment and production process of the battery factory to help it realize the industrial production of batteries.
From this perspective, China-EU battery industry is forming a new bond, with capital, technology and market intertwined and deeply integrated. On the one hand, China enterprises have their own advantages in terms of capacity scale, technology maturity and supply chain control ability; On the other hand, Europe is also constantly strengthening the supply capacity of its key products. Strengthening mutually beneficial cooperation between Chinese and European enterprises will help both sides give full play to their respective advantages and take the initiative in the global new energy vehicle market. Looking forward to the future, China and Europe may be the right way to jointly deal with climate change and energy crisis. (Written by Li Shan, reporter of Science and Technology Daily in Germany; Planned by He Yi, Fang Linlin)