Growing uncertainties put the brakes on Europe's battery plans
Falling registration figures for electric vehicles are becoming a challenge for battery pioneers in the automotive industry. Many projects are on the brink of cancellation. There are many reasons for this. And the developments raise the question of whether Europe can play a leading role in global battery production in the future.
Euphoric investment announcements and ambitious projects have been the order of the day in the European electromobility sector in recent years. However, falling registration figures for electric vehicles are becoming a challenge. Many projects are on the brink of cancellation. There are many reasons for this. And the developments raise the question of whether Europe can play a leading role in global battery production in the future.
Electromobility is a market worth billions - also for plant engineering: between 2021 and 2023 alone, electric car and battery projects worth over 26 billion euros have been announced in Europe. For battery production - the centrepiece of electric cars - capacities of 1.7 terawatt hours were recently planned - enough to equip around 25 million cars with them. According to the announcements, 13.5 billion euros are to be invested in Germany alone. In the UK, it could even be twice as much.
However, the euphoria has been dampened. This is because falling registration figures for electric cars are dampening the investment mood of car companies and battery manufacturers. Back in the summer of 2023, industry market researcher T&E found that 68 per cent of the announced project volume for new cell production is on hold. The reason: the profitability of the projects is increasingly being questioned in view of generous subsidies in the USA and growing capacities and dumping prices in China. Most recently, the state subsidy freeze for electric cars in Germany sent demand in Europe's largest car market into a tailspin. The inflation-induced rise in financing costs is also putting pressure on battery and car manufacturers' willingness to invest.
Generous subsidies in North America
However, the reasons for the change in plans are complex. At the beginning of July, the Swedish battery cell manufacturer Northvolt announced that it was rethinking its expansion plans. While a factory in Canada is out of the question due to the generous subsidies there, expansion in Europe seems less clear. Northvolt's major customer BMW has cancelled an order worth billions because the Swedish manufacturer is apparently unable to deliver the agreed quantities for quality reasons. The Swedish company denies that this jeopardises the start of construction of another Northvolt project in Heide, Lower Saxony, which was publicly and politically celebrated in March.
In June 2024, Mercedes and Stellantis halted work on their joint battery factory. The joint venture named ‘Automotive Cells Company’ (ACC) had announced investments totalling 7.6 billion euros at the beginning of the year. While ACC is already producing in Douvrin, France, the plans for gigafactories in Kaiserslautern (Germany) and Termoli (Italy) have now been put on ice. The reasons: The recent weak demand for electric cars and the hope for new battery cell technologies. The Chinese battery manufacturer Svolt had previously announced that it would not be building a planned cell factory in Lusatia. The Svolt project in Überherrn, Saarland, is also on the brink of cancellation. Here too, falling demand is playing an important role in the decision.
Tesla is different: the US car manufacturer had already said goodbye to a battery gigafactory in Grünheide (Germany) a year ago. Tax incentives are attracting the electric car pioneer to the US state of Nevada. Overall, the European goal of playing a leading role in global battery production in the future is moving further and further away despite ambitious zero-emission targets by 2035. The industry service T&E estimates that 37 per cent of global investment in electromobility has currently been announced in the USA, but only 26 per cent in Europe.
Typical growing pains of a young industry
These are the typical growing pains of a young industry, which are significantly exacerbated by fluctuating demand expectations. This is because battery technology is always subject to strong development spurts - and so a new technology can make investments in quickly outdated products and manufacturing processes just as unprofitable as falling prices when demand declines. In addition to lithium-ion batteries, the less expensive lithium iron phosphate batteries have recently become increasingly popular. In addition, the development of sodium-ion batteries is being driven forward, particularly in China, and the industry giants Toyota and VW have high hopes for solid-state batteries, which offer advantages in terms of energy density, safety and service life.
At the same time, the still young battery industry is facing increasing competitive pressure from China and North America. And finally, speculation from politicians that the EU's decision to reverse the ban on the sale of new cars with combustion engines from 2035 is causing additional uncertainty in Europe.
Most mobility experts agree that this will not stop the transformation of mobility away from the combustion engine, but will only delay it. Whether capacities for 25 or 5 million electric vehicles per year - plant manufacturers and suppliers of battery factories will have a lot to do in the coming years. And chemical and mechanical process engineering will play a key role in this!
