Competition is good for Business: Europe and North America stimulate Scale-up of Battery Industry

Q4 2023

Both electric vehicle as well as battery sales continue to grow in 2023 in the double-digit percentage range, and especially Europe and the US show high increases of fully battery-electric vehicle (BEV) sales in year-over-year comparisons. However, expectations for future developments are currently muted as decreasing demand is predicted in some cases. As a result, medium-term expansion targets are corrected downwards or delayed. In the USA, the Inflation Reduction Act was and is a driver for ambitious expansion targets. This act of legislation came into effect in the middle of 2022 and was followed by private investments of more than 110 billion USD, especially into the creation of a local battery value chain. European companies are seizing the opportunity to build production sites in North America as well. Though, these market actors still aspire to uphold their expansion plans in Europe so that local value chains develop in both Europe as well as North America. Part of these value chains are the production of battery cell casings and aluminium as well as copper foils. This market update shows where the producers of these components are located in Europe and what expansions plans are currently known.

In the European Union, BEV new registrations until August increased by 56% compared to the previous year and a rise by up to 1.4 million BEVs is expected until the end of 2023. PHEV sales remained nearly constant in comparison to 2022 numbers and could amount to 800,000 new registrations within the EU until the end of the year.

The market analysis is available for download in the Media & Publications section >>

Build-up of the battery industry -status quo and challenges

Q2 2023

Electromobility remains the prime driver of growth for the sale of lithium-ion batteries. In line with the record sales of more than 10 million electric vehicles worldwide in 2022, the sales of traction batteries increased significantly by 76%. This upwards trajectory continues in 2023. In order to meet the rising demand, an increasing number of cell production plants and factories for battery components in Europe are starting production. Until the end of 2023, battery cell production capacities could reach 175 GWh/a. This market update highlights the challenges that arise during the development and ramp-up of cell production plants.

Despite great challenges, European battery cell production is accelerating. In the coming years, more factories will start operations and ramp up capacities, thus the growing demand for batteries will be satisfied from increasingly domestic production.

The market analysis is available for download in the Media & Publications section >>

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Find all updates on the battery cell market here

A turbulent battery market

Q4 2022

Worldwide, regardless of the slump in global vehicle production, the number of new registrations of battery-powered vehicles and thus also the demand for battery cells continues to increase. In Europe, about 50 battery cell manufacturing sites are currently planned, under construction or partly already in operation. The cumulative annual production capacity in 2030 is expected to grow by about 21% compared to the Market Analysis Q2 2022. Assuming full implementation, the factories are expected to be able to cover the European demand for battery cells from 2024 onwards and the cells produced in 2030 will be sufficient for traction batteries for up to 20 million vehicles.

The actual market development depends in particular on how the battery industry deals with the numerous challenges it currently faces, including the supply of raw materials, precursors, energy, skilled labour.

The market analysis is available for download in the Media & Publications section >>

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Heavy commercial vehicles boost future battery demand

Q2 2022

The electrification of the automobile sector includes the powertrain transformation of heavy commercial vehicles. In our “Market Analysis Update Q2 2022“, we focus on how the goods transport segment will influence the demand for battery production capacity in Europe. A simple classification into four use cases serves as a model to estimate the required battery capacities and allows a comparison to the cell demand posed by passenger car production. In this context, we have analysed whether the ramp-up of European battery production will be able to meet the projected demand of the entire automobile industry in the foreseeable future.

In 2021, 1,243 motor vehicles for the transport of goods with a permissible total weight of over 3.5 t (medium and heavy commercial vehicles, herein collectively abbreviated as “HCVs” for simplicity) that can be electrically charged were newly registered in the EU. Despite this 26.6% increase in registration figures compared to the previous year, diesel drives continue to dominate the HCV class. Accordingly, HCVs were responsible for about 23% of CO2 emissions from road transport in Europe in 2019, although they account for only about 2% of all vehicles on European roads.

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Ongoing momentum in the battery cell market

Q2 2021

Current market developments show that Europe is likely to achieve the ambitious goal of supplying around 30% of the global demand for battery cells from German and European production by 2030. The European automotive industry can plan for battery cells from domestic production in the future.

Registrations of electrically driven vehicles increase significantly – despite contrary market development In 2020, the European sales volume of electric vehicles increased significantly. As a result, the number of Chinese new registrations was surpassed for the first time. In the European Union (EU), 144% more battery-electric vehicles and 266% more plug-in hybrids were newly registered in the passenger car (M1) vehicle class in 2020 than in the previous year. However, new registrations of electrified vehicles also increased in the segments light commercial vehicles (LCV; N1) and buses (M2/3) by 38% and 9% respectively.

Total vehicle sales in Europe in 2020 fell considerably compared with the previous year, partly due to the Covid crisis. Due to the simultaneous significant increase in electrically powered vehicles, their market share has more than tripled compared to the previous year for passenger cars, almost doubled for LCV and increased by almost 50% for buses (see Figure below). This rapid increase in vehicle sales led to an equally sharp rise in demand for battery cells. According to an extrapolation based on new registrations in the EU in 2020, demand has risen to around 35 GWh, an increase of 121% year-on-year.

European Battery Cell Production Expands

Q4 2021

Current market developments show that the European automotive industry is well on track achieving the EU's emission reduction targets. Sufficient battery cells produced in Europe will be available to ensure a substantial electrification of drive technologies in the future.

The ambitious climate and emissions targets set by the EU Commission's climate package as well as by individual member states and car manufacturers will result in a significant increase in need and demand for battery cells in the coming years. Correspondingly, high production capacities will have to be built up and expanded in Europe timely.

The enormous demand for Li-ion cells from the automotive industry in the years ahead can be met by the planned development and expansion of production capacities in Europe. Based on the demand of the progressive scenario, the supply of cells from European production is given if almost all announced production capacities will be realised.

If the share of battery-electric vehicles in total production increases according to the conservative scenario, which would be sufficient to meet the requirements of the currently applicable EU regulation, the cell demand of the automotive industry would already be covered from 2023 by the production capacities assumed to be ensured.

However, whether the supply of batteries can meet demand depends on a sufficient supply of semiconductors and raw materials to the industry. To counteract the threat of raw material shortages, recycling capacities are being successively built up, the utilization of alternative raw material deposits is being evaluated, and research is being conducted on novel cell chemistries that use fewer or no critical raw materials.

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Project Management Accompanying Research
Battery Cell Production
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