Our resident battery industry expert, Sten Engström shares his views about current and future battery production, the Nordic ecosystem and how early investment and collaborations will drive sector growth.
WHY HERE, WHY NOW?
EU CO2 emission regulations for the automotive industry are gradually getting tougher and rapid electrification is the only viable solution to meet new legislation and create an industry that is fit for the future, both economically and environmentally. Projections suggest that by 2025 there will be a demand for Li-Ion batteries in Europe of 290 GWh/y (corresponding to nine Tesla Gigafactories) however current plans in Europe would only be able to deliver half of that.
The huge shift towards electrification is going to affect 40-50% of the automotive supply chain. If the industry fails to develop and invest, Europe risks losing automotive production to other regions. The importance of the industry is vast and both EU and automotive OEMs demand continued and expanding production in Europe. This presents an enormous opportunity to establish a European supply network for batteries both for European and overseas companies.
DEMAND FOR SUSTAINABLE PRODUCTION
As shown, a very large share of the value added in car manufacturing will be affected by the electrification with batteries representing the single most expensive part. The most energy intensive steps in battery production is the processing of anodes and cathodes materials. This pre-production phase consumes more energy than any other part of the production process, so it is critical that robust sustainability techniques and solutions are found and implemented to ensure the whole value chain is not compromised.
Increasingly, automotive manufacturers will need to implement sustainability through their entire supply chains in order to comply with carbon reduction regulations. Volkswagen VW are already doing this with their collaboration with Northvolt and are planning on building a battery plant in Salzgitter. However, the materials supply for the anode/cathodes to the plant will come from Northvolt’s future production lines in Sweden.
SWEDEN'S UNIQUE POSITION
Sweden’s renewable low-cost energy and know-how in processing are key. Battery expertise will develop rapidly in the next few years thanks to Northvolt’s establishment, creating over 3,000 direct jobs and more among local suppliers.
Skellefteå municipality and other stakeholders are working closely to develop and import the right skills and Northvolt has already brought in highly experienced battery engineers from Japan, Korea and China. The ripple effects and knowledge and tech transfer imply that availability of skilled people for battery production in Sweden is rapidly increasing.
Sweden’s strategic geographical position is a key factor for the emerging battery sector, but the primary driver is the access to clean, green energy. The transport distance from Sweden is a small trade-off given the benefits of achieving massive energy savings, a strong environmental profile and long-term viability of materials development (anode/cathode) as environmental regulations become stricter.
Until now, companies have been able to purchase energy certificates as a short-term solution and a form of greenwashing that is not likely to be permitted in future. Sweden’s energy grid is one of the most sustainable in Europe; Poland for example, emits 60 times more CO2 than Sweden’s average output and in Sweden’s north where there are more hydropower and wind installations the difference is even greater.
Additionally, the north of Sweden is in close proximity to raw material rich Finland, which is creating a very strong Nordic cross-border battery cluster.
Creating a robust and green supply chain for battery production materials is a critical challenge today. Materials suppliers will need a clean energy mix to power their processes. That’s where Sweden has a unique role and offers a great opportunity for the industry.
There is a strong case for Asian manufacturers of batteries and battery materials to locate their European operations in Sweden to access Swedish resources and form collaborative partnerships within the sustainable battery production ecosystem.
The strategic, environmental and innovative factors combined with an open and accepting approach to foreign investments makes Sweden an ideal location for sustainable battery related production.