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TEHRAN, June 05- Chinese electric vehicle giant BYD (1211.HK) is looking at launching battery production in Europe, joining Asian rivals aiming to cash in on a green car revolution and threatening attempts by Brussels to nurture a home-grown industry.
TEHRAN, Young Journalists Club (YJC) -Chinese electric vehicle giant BYD (1211.HK) is looking at launching battery production in Europe, joining Asian rivals aiming to cash in on a green car revolution and threatening attempts by Brussels to nurture a home-grown industry.
Keen to capture a European car battery value chain that will be worth an estimated 250 billion euros ($290 billion) by 2025, the European Commission launched an alliance of local companies last year aiming to build 10-20 huge battery factories.
But only Sweden’s Northvolt have plans for large lithium-ion battery factories in Europe so far and some leading European carmakers have already struck deals with Asian suppliers setting up in Hungary and Poland.
“We are considering cell production outside of China and that includes Europe,” Julia Chen, Global Sales Director at BYD Batteries, told Reuters, speaking about the production of both automotive and home storage batteries.
BYD (002594.SZ), which also makes electric buses, cars and solar panels, said it was not clear where in Europe a battery site might be. “It would be possible wherever there’s a market.”
The company, which is backed by Warren Buffett’s Berkshire Hathaway (BRKa.N), joins Korea’s SK Innovation (096770.KS), Japan’s GS Yuasa Corp (6674.T) and China’s Contemporary Amperex Technology (CATL) (300750.SZ) in looking to locate battery plants in Europe.
South Korea’s LG Chem (051910.KS), Samsung SDI (006400.KS) both have European factories due to open soon while China’s GSR Capital already produces battery cells at a UK plant it bought from Nissan (7201.T).
While Asian electric vehicle (EV) cell battery factories in Europe would bring jobs, Brussels is concerned companies in the bloc are missing out on a growth industry and risk becoming dependent on foreign technology.
“We have to move fast because here we are in a global race. We need to prevent technological dependence on competitors,” European Commission Vice President Maros Sefcovic said at the launch of the European Battery Alliance’s action plan in May.
But some investors say they are wary of backing European EV battery suppliers after seeing local solar panel firms founder in the face of cheap Chinese imports over the past decade.
European battery companies would need billions in EU support to rival Asian firms that have received similar state subsidies and Brussels may be better off promoting next-generation solid-state EV batteries instead, investors say.
“I don’t believe anyone in Europe can be competitive with the Asians,” said Gerard Reid, founder of Alexa Capital, which advises firms in the energy, technology and power infrastructure sectors.
For a graphic showing European EV battery supply and demand: tmsnrt.rs/2JnDSOX
‘GREEN’ BATTERIES
Electric and hybrid vehicles are expected to account for 30 percent of the global auto market by 2030, according to metal consultants CRU, up from 4 percent of the 86 million vehicles sold last year.
Global automakers plan to invest at least $90 billion in electric cars and batteries, the most expensive component in the vehicles, to finance hundreds of new models over the next five years.
For now, carmakers in Europe have been importing batteries from Asia, but as production ramps up that will become less viable. Setting up production in Europe would cut shipping costs by a quarter, consultancy P3 Group.
But some carmakers are not waiting for a European industry, instead signing contracts with Asian firms coming to the region.
German’s BMW (BMWG.DE) said it was not involved in the European alliance while Europe’s biggest automaker, Volkswagen (VOWG_p.DE), said it plans to get batteries from LG Chem’s Polish factory due to open this year. Mercedes maker Daimler (DAIGn.DE) has awarded a contract to CATL.
The European Commission’s plan calls for 110 million euros in battery related research, help for projects from a 2.7 billion euro EU innovation fund and the development of an EU “green battery” trademark.
Supporters of the initiative argue Europe can carve out a niche by selling green batteries produced with renewable energy and ethically sourced raw materials.
FINANCING ROUND
Northvolt, which has held talks with European automakers, aims to launch its $5 billion gigafactory in late 2020 and produce 32 gigawatt hours of battery capacity each year by 2023.
But investors have been cautious about pouring money into new European battery ventures.
Northvolt’s first financing round, intended to raise 80 million euros to 100 million euros to help set up a test factory, took slightly longer than expected, a spokesman said.
In the end, the bulk of the financing was provided by the Swedish Energy Agency and the European Investment Bank, which provided a loan of up to 52.5 million euros.
Source: Reuters
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