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The EU is seeking to spur development of the bloc's electric
vehicle (EV) industry by approving member state investments in a
€11.9 billion ($14.25 billion) battery research project.
Batteries make up a third of electric car prices and contain
precious materials, but this type of innovation will lead to the
bloc's EV success, according to a statement on the decision by the
European Commission (EC) Executive Vice President overseeing
digitization, Margrethe Vestager.
By 2030, all EV batteries must be recycled and traceable,
enabling manufacturers to reuse high levels of valuable materials
like cobalt, lithium, nickel, and lead, the EC said in a December
proposal to update its battery regulation. Battery demand could
increase by a factor of 14 over the coming decade due to the rise
in production and use of EVs.
Furthering the EC's legislative goals, the research project will
forge a sustainable, traceable, and domestic "battery value chain"
covering raw materials, design, and manufacturing of battery cells
and packs as well as their recycling. To extend the lifespan for
batteries by upcycling them as energy storage, the project also
will study real-time control and measurement systems that could be
used, for example, to test the health of 10-year-old electric car
batteries.
The project aims to make battery production processes more
environmentally friendly by removing carbon, energy demand, and
solvents. It will also monitor material supplies with data
analytics and improve both lithium-ion batteries and
post-lithium-ion batteries, for which certain materials are
costly.
This project was put forward by Austria, Belgium, Croatia,
Finland, France, Germany, Greece, Italy, Poland, Slovakia, Spain,
and Sweden, and follows a similar project involving many of the
same states two years ago.
Both ventures are EU-backed Important Projects of Common
European Interest (IPCEI), international public-private research
projects that have gained a free pass on EU state aid rules
preventing subsidies that might warp industrial competition. Of the
financing, €2.9 billion will come from public coffers and €9
billion from private investment.
IPCEIs are intended to de-risk private investment in sectors
like autonomous vehicles, hydrogen, low-carbon industry,
internet-of-things, and cybersecurity.
In the latest IPCEI, about half of the companies involved are
based in the EU's automotive manufacturing heartland of Germany,
where the government also coordinated the project. BMW and Tesla,
which both have factories in Germany, could receive funding as they
are named as participants. Italo-American Fiat Chrysler Automobiles
also claimed a spot.
Companies headquartered in Europe that may now receive state aid
include chemical companies Arkema, Borealis, and Solvay as well as
battery company Sunlight Systems and demand response provider Enel
X.
Cobalt supply
In a statement, EC Commissioner for Internal Market Thierry
Breton said the project could reduce "unwanted dependencies on
third countries" in vehicle and energy storage battery
production.
Cobalt is found in the lithium-ion batteries in most EVs and
mainly produced in Democratic Republic of the Congo (DRC) and
China, with around 55% of the world's supply mined in the DRC,
according to a report by the EC's Joint Research Centre in 2018.
The competition for supply of cobalt from 2020 onwards and the
human rights implications of mining it were cited as roadblocks for
future EV markets.
Cobalt mining in the DRC was at the heart of a 2019 federal
class-action lawsuit filed against Tesla and
other tech companies using cobalt on behalf of the parents of
children who were killed or maimed while mining cobalt for Glencore
and Huayou.
Raw material and battery chemistry is a long way off removing
cobalt from the battery supply chain, Isobel Sheldon, chief
strategy officer UK at battery manufacturing startup Britishvolt
told IHS Markit. Britishvolt is aiming to build the UK's first
battery-making gigaplant by 2023.
As the ramping up of EV markets accelerates demand for
batteries, manufacturers have sought to use less cobalt in the most
common lithium-ion batteries, the nickel manganese cobalt (NMC) and
nickel-cobalt-aluminum (NCA) alternatives, said IHS Markit Senior
Analyst Youmin Rong in the January edition of its Battery Cell
Manufacturer Database.
Concerns over the safety of lower cobalt batteries have
encouraged the industry to research other cathode technologies,
such as nickel, cobalt, manganese, and aluminum (NMCA), and
lithium-manganese-nickel oxide (LNMO), he said.
EV and transport batteries make up the vast majority of the
global market and cobalt-containing NMC batteries make up around
90% of the top three battery manufacturers' combined manufacturing
capacity, a recent IHS Markit report shows.
NMC batteries also make up a large part of the energy storage
battery market, although cheaper lithium iron phosphate (LFP)
batteries are growing in popularity.
International competition
Europe saw record-breaking quarterly additions of battery
manufacturing capacity at the end of 2020 after Tesla announced the
construction of its fourth gigafactory in Berlin, Germany,
according to Rong.
But fast-growing European battery markets are playing catch-up
with China, which produces the vast majority of the world's
lithium-ion batteries. "With capacity expansions in mainland China
slowing down on a year-upon-year basis, Europe will become the
fastest-growing market for battery manufacturing, averaging 80%
year on year, in the coming three years. It benefits from a rising
number of European countries committing to cease sales of
gasoline-powered vehicles in the coming decade," writes Rong.
EC officials put the continent's recent battery sector growth
down to EU policy. "Some three years ago, the EU battery industry
was hardly on the map. Today, Europe is a global battery hotspot.
And by 2025, our actions under the European Battery Alliance will
result in an industry robust (enough) to power at least 6 million
electric cars each year," said Maroš Šefčovič, a vice president of
the EC's interinstitutional relations and also runs the EU-funded
public and private grouping called the European Battery Alliance,
launched in 2017.
The UK government must also develop local and European supplies
for its EV industry. This is thanks to Rules of Origin within the
Brexit trade deal requiring 50% of EV battery content originates
from the UK or Europe by 2024.
The UK's battery sector, which was historically constrained by
the EU's state aid rules, now may be overshadowed by the bloc.
"There is a threat that Europe races ahead of the UK in terms of EV
development and deployment, owing to state aid. However, I feel
confident that Number 10 will step up and give the UK economy the
assistance it rightly deserves. We have so much battery R&D
talent on our doorsteps that we must utilize and create a
commercial success of," Britishvolt CEO Orral Nadjari told IHS
Markit.
Posted 05 February 2021 by Cristina Brooks, Senior Journalist, Climate and Sustainability