written by Emma Vendola, Imperial College London
Germany is determined to take an active role in the battery manufacturing sector and increase Europe’s share of battery production capacity. Investments for half a billion Euros have been allocated to the Berlin area, where a new battery manufacturing plant will be based.
The need for change towards greener transportation solutions on the political side, and the urge of the German automakers to catch up with Tesla on the electric vehicle market, will be the new driver for a fundamental change not for the automotive sector alone but for the global approach towards energy production and management.
Batteries currently take up a good half of the price of an electric vehicle and a lot of concerns regarding performance and warranties, which inflate the final pack cost figure even more. Among Elon Musk’s objectives in establishing Tesla’s first Gigafactory, there was the necessity to exploit economy of scale by producing more units and streamlining the overall vehicle production line: starting from a lithium and carbon for a single cell and ending with a full vehicle. All done in one place, as it has already started to happen in the Nevada plant for the Model 3 powertrain production.
The German government envisages at least six millions electric cars on the European roads by 2030. At present Europe only produces 2.5% of the global GWh in terms of battery storage, a number that is set to be doubled in the near future. According to Bloomberg New Energy Finance the battery prices will plunge at a fast rate; while BNEF has estimated that the global battery manufacturing capacity will be three times greater by 2021, reaching 278 GWh against the current 103 GWh. Electric vehicles will finally be cheaper than conventional vehicles by 2023.
Daimler, which is the recipient of the government’s investments, and the other European OEM have a long way to go in order to meet the European governments expectations and keep Tesla’s pace. While all European car manufacturers have electric cars designs in the pipeline, the Tesla has set the main competition fields: electric trucks and vertical integration of energy production and consumption. Going beyond Gigafactories’ capability of making a whole car from the cells to completion (which Musk is working to reproduce in 4 or 5 new plants), the Tesla has acquired New York based 12-million-square-foot SolarCity, a plant that could fabricate up to 10,000 solar panels per day. This sets the competition to another level: offering Tesla’s customers integrated solutions from solar panels to cars and household appliances, which will be totally independent form the grid and able to power themselves.
In prevision of the future demand form Volkswagen AG and Renault SA groups, other large scale battery factories are being planned in Sweden, Hungary and Poland. Stockholm alone will be host of a 4 billion Euro investment by the NorthVolt AB startup. Moreover, following Musk’s announcement in late 2016 regarding the search for a location of Gigafactory 2 in Europe; France, Finland, Portugal and Spain are competing to be the host of the project. Gigafactory 2 would bring an investment of 5 billion USD and create up to 10,000 jobs.
It has been estimated that joining forces across the Old Continent will cut the pack prices by 43%, enabling electric vehicles to become a competitive product on the automotive market.
Tesla’s CEO ultimate view goes well beyond relegating battery production to the transportation sector; lowering energy storage prices is key for the transition to renewable energies; according to his estimation automakers have the capability to lead the world towards the independence from fossil fuels. In this picture battery production investments form rival companies are all contributing towards Musk’s 100 Gigafactories dream; in which 100 plants of the scale of Gigafactory 1 (100 GWh of battery cells and 150 GWh of battery packs per year) could accommodate the global energy demand.
The global effort in enhancing battery technology and their manufacturing will set the ground for more consistent investments in the deployment of renewable energy technologies and in the research on smart grids, power distribution and grid balance. Nevertheless, the future picture raises new questions on battery management, cell disposal, second life battery usage and lithium supply.