Northvolt’s cash crunch and local factories getting canceled undermine the region’s push to reduce reliance on Asia.
Stefan Nicola, Wilfried Eckl-Dorna, Tom Fevrier, and William WilkesYan Cimon, professor of Strategy Faculty of Business Administration Université Laval, talks about the future of Northvolt's Quebec plant.
Meanwhile, 10 of 13 projects in the region by Asian manufacturers such as China’s Contemporary Amperex Technology Co. and South Korea’s Samsung SDI are on track. That suggests their grip on the sector will only increase, putting Western automakers at a competitive disadvantage when there’s a supply crunch or political conflict.
Building a European industry was always going to be a long shot. China supplies about 80% of the world’s lithium-ion batteries and is home to six of the world’s 10 largest EV battery makers, according to BloombergNEF. The country’s rapid expansion — its cell production capacity is already much higher than global EV demand — has depressed prices, raising the bar for new entrants.
Founded by former Tesla Inc. executives, the company had ambitious plans for factories in Sweden, Germany and Canada, but struggled to ramp up production while keeping a lid on costs. In June, BMW canceled a €2 billion order due to quality problems. Three months later, Northvolt laid off a fifth of its workforce and scrapped two cathode material production facilities in Sweden — moves that failed to reassure investors.
Europe is missing out partly because its automakers were slow to shift toward battery technology. VW, BMW and Mercedes were still betting on gasoline and diesel engines when BYD — which started out making batteries for cellphones — introduced its first electric car in 2008. European automakers’ efforts to sell their profitable gas guzzlers as long as possible undermined a European Union push, started in 2017, to fast-track local battery projects and unlock more funding for homegrown suppliers.
“Making batteries is still hard — high capital requirements, cutthroat pricing and low margins, all in a high-precision manufacturing environment with demanding customers,” said Colin McKerracher, an analyst at BNEF. “The companies that are really good at it have been in business for a long time.”
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