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Automobiles
EUROPE FACES HURDLES IN BREAKING FREE OF CHINA EV SUPPLY CHAIN
U.K. battery maker's woes show challenge of launching gigafactories
An electric vehicle by Chinese automaker NIO at a Berlin showroom. Europe has
faced challenges in launching its own automobile battery gigafactories. ©
Reuters
SOTARO YUMAE, AKIRA YAMASHITA and EIKI HAYASHI, Nikkei staff writersNovember 3,
2023 02:01 JST | Europe
CopyCopied
LONDON/FRANKFURT, Germany -- As Europe tries to cut its Chinese dependence for
electric vehicles, U.K. battery makers' recent financial woes highlight the
profound challenge the region faces in building its own supply chain.
Troubled British battery startup AMTE Power secured a financial lifeline after
shareholders approved the issuance of 2.1 million pounds ($2.6 million) in new
shares on Sept. 25. But one shareholder said the company was just postponing the
problem.
AMTE Power, founded in 2013, is listed on the London Stock Exchange's AIM
sub-market for emerging companies. It announced plans in 2022 to build a large
battery plant in Scotland, but its operations have continued to bleed red ink.
"The Company's financial situation is becoming ever more critical," AMTE said in
a July financing update, stressing the need for fresh funding. "Having managed
its resources, the Company now needs to implement a solution within the next few
business days."
Britishvolt, another U.K. startup that had planned to build a gigafactory for
electric vehicle batteries, collapsed in January. Although AMTE has gotten a
respite with the recent capital increase, it could face another cash crunch if
it can't get its business up and running.
Europe is lagging in automotive battery production. The top two players, China's
Contemporary Amperex Technology Co. Ltd. and South Korea's LG Energy Solution
accounted for half the global market in 2022, according to South Korea's SNE
Research. There are no European companies in the top five.
Automotive batteries require different know-how from internal combustion
engines, in which Europe has long had strength. While China and South Korea are
making steady technological advances, Sweden's Northvolt, founded by a former
Tesla executive and backed by Volkswagen and others, is also having trouble in
launching mass production.
Northvolt built a battery plant in northern Sweden in 2021. The plan was to
expand production capacity from 16 gigawatt-hours to 40 GWh from 2023 to 2025,
but the company has not been able to improve yield as it scales up production
and has failed to meet the planned supply level, according to a client company.
There were 41 gigafactories planned in 13 European countries as of June 2022,
from those at the planning stage to those already in operation, according to
U.K. research group the Faraday Institution. If all of the plans proceed,
production capacity in the region will increase from over 100 GWh in 2022 to
about 1,100 GWh in 2030.
But China is still far ahead in battery technology, and if Europe wants to
improve its supply chain, it will have no choice but to rely on China. Its
technological reality does not match government policy.
The only battery gigafactory in the U.K. belongs to AESC Group, which was
acquired from Nissan Motor by a Chinese company.
India's Tata Group announced this summer plans to build a battery gigafactory in
the U.K. The new plant is set to receive government subsidies, but AESC, rather
than a domestic manufacturer, is said to be involved.
"It is my understanding that there are no concerns about our company being
Chinese-owned," said AESC CEO Shoichi Matsumoto. But both Tata and U.K. Prime
Minister Rishi Sunak have remained silent on AESC's involvement.
The difficulty of reducing dependence on China is not limited to manufacturing.
Of the 34 materials designated critical by the EU, such as nickel and others
used in batteries, China is the region's largest supplier of 11, either as a
miner or as a processor.
As China holds sway over the entire supply chain, "what's important now is not
breaking away from dependence on China for batteries, but rather figuring out
how to deal with China," said Sanshiro Fukao of Japan's Itochu Research
Institute.
The inability of domestic supply chains to keep up with demand is beginning to
affect government policy. Following the EU, the British government announced in
September that it would adjust its emission reduction plans for automobiles.
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