Swedish plant ramps up lithium ion cell production in race to profit from Europe’s growing electric car demand
Last modified on Wed 29 Dec 2021 08.24 EST
Electric cars have gone mainstream in Europe – they accounted for nearly a fifth of all car purchases in the UK last month. Yet one piece has been missing up to now: European batteries.
That is now changing. On Tuesday night, Northvolt, a startup, produced its first lithium ion battery cell at a plant in northern Sweden. It is the first of a series of new factories that investors hope will allow Europe to carve out a big proportion of the electric vehicle market – and weaken the stranglehold built up by manufacturers in China, Japan and Korea.
The Northvolt Ett site will be the first European-owned plant to produce at so-called gigafactory scale. Gigafactories are generally considered to be those capable of producing enough batteries each year to provide about 15 gigawatt hours (GWh) of cumulative storage.
Only two large battery factories are operational in Europe, according to Benchmark Mineral Intelligence (BMI), a battery data company: a factory in Wrocław, Poland, run by Korea’s LG, and another owned by Korea’s Samsung near Budapest in Hungary.
Yet there are 25 gigafactories planned for the continent by 2030, according to BMI, as the industry races to keep up with soaring demand for electric cars. Nine of those are owned by Asian manufacturers, which control most of the global supply.
The UK is arguably further behind the rest of Europe, with plans for only two gigafactories. One will be a major expansion of a small battery plant in Sunderland by the Chinese company Envision, while the Glencore-backed startup Britishvolt is attempting to secure funding for a homegrown rival in nearby Blyth.
Local authorities in Coventry are trying to find a manufacturer for a third site at the local airport, but nobody has yet stepped forward – a situation that has cast a shadow over the prospects of the UK automotive sector as it strives to replace the declining internal combustion engine industry.
Simon Moores, BMI’s chief executive, hailed Northvolt’s first cell as “Europe’s first gigafactory-era lithium ion battery”.
Despite its startup status, Northvolt has gained heavyweight financial backing from Volkswagen, the world’s biggest car producer, and the investment bank Goldman Sachs. Its $2.75bn (£2.1bn) funding round in June valued it at $12bn.
Northvolt hopes to rapidly expand production at the plant at Skellefteå in northern Sweden to produce 60GWh a year – enough to supply batteries for a million electric cars. Commercial deliveries will start in the new year.
The startup already boasts contracts worth $30bn with big European companies including the carmakers BMW, Volkswagen, Volvo Cars and Polestar, the truck manufacturer Scania, and the energy storage firm Fluence. Carmakers are belatedly ramping up electric vehicle production to meet tightening emissions targets as well as the challenge from their US rival, Tesla, which has built its own battery and car plant in Berlin.
Peter Carlsson, Northvolt’s chief executive and co-founder, said the production of the lithium ion battery on Tuesday represented“a great milestone”.
“Of course, this first cell is only the beginning,” he said. “Over the course of the coming years, we look forward to Northvolt Ett expanding its production capacity greatly to enable the European transition to clean energy.”
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