As the world continues its shift towards electrification, it is predicted that the European battery market will boom between now and 2030. Therefore, the scaling up of the UK’s battery manufacturing ecosystem represents a huge opportunity.
The Manufacturer sat down with Martin Walder Global VP Industry Incubation at Schneider Electric to discuss the production of EV batteries and where the UK needs to position itself moving forward.
Looking at battery cell production across the world, there are significant discrepancies in capacity. What factors have shaped the current landscape?
MW: There are several factors at play. The first being that the Chinese government have been pushing particularly hard in the last ten years to develop and push towards electric vehicle manufacturing, and developing the supply chain to support this. At present, 85% of batteries and battery operated electric vehicles are being produce in China. Korea is also very prominent in the space with Samsung and LG.
However, European and US car manufacturers have been more reluctant to move to batteries and not been pushing anywhere near as hard as their Chinese counterparts. The electric vehicle shift disrupts the status quo of the traditional manufacturers of course, which has caused reticence, while the European governments have been late to the party in terms of offering their support. Tesla has been hugely innovative, and they are the only company that has really challenged the dominance of Asia when it comes to electric vehicle batteries.
But of course, with European government now dictating the move to electric, and away from carbon producing vehicles, they’ve automatically forced the market’s hand towards EVs, despite the fact that the European suppliers are not really so well set up for it.
Looking at the figures, China took 4.8% of UK market sales, (by volume of vehicles) in 2023. BMW and Mercedes took around 5-6%, and most of that is off the back of electric vehicles, so the market is undoubtedly opening up. The truth is most Europeans are not ready, and if manufacturers are offering EVs, the majority are still using batteries produced in Asia – and when you consider the battery could be 40% of the added value of the manufacture, it’s a phenomenal shift, and the car industry has been rocked in Europe. Once upon a time they owned their whole supply chain and were kings – now they’re being challenged.
Why are China further advanced than their European counterparts?
China have been active in this space for longer and can move a much larger number of gigawatts in comparison to Europe.
Locally, the Chinese market is quite saturated, so companies are now moving out and building plants in Poland and Hungary to make it easier to supply our market. We are also seeing the machinery manufacturers that are making the equipment for all those plants, wanting to get business in European companies because they have already got enough capacity in China. With all the new plants coming on stream they are looking to put capacity into Europe and North America.
Currently the UK has a high dependence on China, re hydrogen, chips, electrification etc. How can this situation be changed and how long would it take?
Putting Tesla aside, everyone else has been holding back. The opportunity in the vehicles that we’re producing today is huge. Everyone’s looking for greater range and more flexibility on charging, so the battle is on for who can develop the next generation of best performing charge times, at the right price level.
There’s a lot of new companies coming into the market looking for funding, and many large automotive companies have invested in several early phase companies to see who’s going to come through first with the next generation technology.
However, the plants that have been built in Europe, with Chinese technology, are not yet performing to the highest throughputs and yields. If a plant is designed to give 98% yield, but is only running at 70%, it is costing more capital than originally planned with less profitability. Also, there’s a good chance that if a plant is producing current technology, this will be obsolete in five years, which presents another challenge.
The first phase now is to produce more batteries in Europe for the vehicles we’re making here, so that we don’t have to be buying in from Asia. This will allow us to be more self-sufficient. We currently produce standard surgical cells with fluid electrolytes, which is an older technology. This is suitable to put in cars now, but we need to consider the next generation of technology for the future.
This will take away a lot of the safety risks. There have been instances where vehicles have gone up in flames because the liquid electrolyte is riskier than the solid state technology which we are looking at for the batteries of tomorrow.
We must define the technology and know-how to manufacture with the most automated machines and repeatable quality. If we can do that, we can get back to the top of the curve. The automated machinery market in Europe for food and beverage is some of the strongest in the world so we need to be transferring that into the battery space. There are a lot of unknowns, particularly as we move to the next generation technology.
What needs to happen for the UK to take full advantage of the expected electric battery boom?
One of the challenges we have in the UK is that the machinery market is not like it was 14 years ago. There are some great companies, but we need more EV battery plants and funding from the government to support the supply chains.
The money that is going into battery production now has come from what we were spending in other areas, 5-10 years ago. There have been a few recent examples of this investment including the Envision plant with Nissan and Agratas which partnered with Tata Technologies.
The early phases of any new projects will be using Asian technology but in the second phases we have got to start bringing in some of the more innovative European companies. This was the prime reason that Schneider Electric helped to establish the Upcell Alliance which has $2bn in investments and is looking to work more with European companies.
Ourselves, an end user and six machinery manufacturers wanted to get a stronger European base, so put our heads together to look at what was possible and how to build the battery supply chain. We decided to get a group off the ground, which works with the government, on research and development of next generation technology. This is a long-term project and in the last 18 months it has gone from strength to strength. We’ve now got over 20 battery manufacturers interested, and we have opened ourselves up to US companies too.
Every six weeks we have conference calls where companies share what they’re working on. The Upsell Alliance also seeks government grants to support the coming together of end users and some of the machinery companies and academics to work on batteries. Physically we get together every six months in different locations, bringing in local government and supply chain.
We have been to Paris, Copenhagen, Barcelona and Milan. I’ve recently been involved in Spain, working with the Basque government. And there is also currently activity in Norway, Sweden, Denmark as they’re active on sustainable battery hydrogen. France have recently committed €1.5bn to a Taiwanese company project and are building a facility in Dunkirk.
I’d like to encourage more UK companies to get involved with the Upsell Alliance, and with other European activities, to start looking at technology to provide European and UK plants.
Are most European countries in a similar stage in terms of EV batteries?
There’s a general interest everywhere, but Germany’s has a few investments by default because they have a larger automotive industry. One of the early movers in Europe was Northolt based out of Sweden, and they put a plant into Germany and now Canada. As mentioned, France are also being very proactive and have Prologis building huge plants with the French government I support. In Norway, there’s some innovative players but the government doesn’t seem to be quite as supportive as they might be.
Company-wise throughout Europe, Schneider is number one in this space, then ABB and Siemens. These companies are leading the infrastructure for EV charging, the efficient running and the building of optimisation.
How rapidly is battery technology moving forward and changing?
Right now, there are a few companies working very hard on solid-state electrolyte technology which should be in vehicles by 2027/2028. The key issue here is the range of the vehicle; increasing that to potentially 800,00km and charging up to 85% in 20 minutes.
There’s a lot of different companies with slightly varying technology. But everyone is currently fighting for how to produce the next generation technology for the right price.
What impact did the Britishvolt collapse have on the UK battery market and what will the legacy of this be?
The collapse of Britishvolt hit the UK confidence straightaway, and it slowed several companies down that were that were already invested.
But it did give us something to work on. If we can’t provide local technology because there is too much pressure on production then we will have to buy what is available from places like China. While that is in play, it is the time to begin work on the next generation, creating a plan that is most effective, highest performing and automated.
In the UK, if a manufacturing process is highly automated, you can manufacture the same as they do in Asia. If not, costs will be too high with 1,000s of people doing manual tasks, meaning you will never have a long-term sustainable facility.
