The latest data from the European Automobile Manufacturers’ Association underlines the challenges facing European battery makers.
Battery-electric cars accounted for 12.5% of the EU car market last month, down from 13.8% the previous year. Registrations of battery-electric cars declined by 12% compared to April with Belgium and France the only key markets to record growth.
European manufacturers also face intense competition from Asia. Data from TrendForce indicates more than three quarters of the world’s lithium-ion batteries are produced in China and six of the top ten electric vehicle battery manufacturers are headquartered in China.
However, increased demand for solid-state batteries – which are safer, charge faster and last longer than lithium-ion batteries – offers encouragement to European producers such as
Eindhoven-based solid-state battery start-up LionVolt, which earlier this year acquired the battery cell production operation of UK battery manufacturer AMTE Power.
The site at Thurso is being repurposed to manufacture battery cells based on the company’s 3D solid-state thin-film technology and will allow it to accelerate the commercialisation of its products.
What makes this deal interesting is how it highlights the gap between the UK’s track record in technology innovation and its success in commercialising this innovation according to Kevin Brundish, CEO at LionVolt.
Make UK’s Manufacturing Outlook 2024 Q1 survey suggested Britain’s manufacturers are facing the prospect of two years of low growth. Brundish reckons there is too much focus on service industries in the UK, referring to recent comments from the Institute for Public Policy Research that investment in the UK lagged that of other G7 nations.
“The UK must get the right balance between attracting foreign organisations and helping UK-founded businesses expand,” he says. “Its home market will be the last place a company withdraws from in an economic downturn.”
“This strategy promotes long-term economic growth and stability by guaranteeing that financial gains – including profits and intellectual property – stay in the UK. Supporting domestic companies also increases economic sovereignty (lessening reliance on foreign capital) and promotes entrepreneurship.”
Brundish adds that the UK needing a trade deal to access the European single market without significant tariffs – in addition to high energy costs – have removed some of the attraction of setting up manufacturing in the UK.
In recent years the tendency has been to commercialise and manufacture innovation offshore. Battery manufacturing is a good example of this approach, with the original Li-ion chemistry being innovated in the UK in the 1970s but successfully commercialised and manufactured in Asia.
The CEO of LionVolt is sanguine about the slowdown in growth of electric vehicle sales in some major markets, attributing it to a combination of cost, range anxiety, charging speeds and infrastructure.
“We are focused on increasing energy density – how much power can be packed into each battery – thereby improving the range and efficiency of electric vehicles at charging speeds that are acceptable,” he explains. “Once this improves, I believe demand will grow again.”
Brundish says direct competition makes it a lot harder to raise capital due to lower manufacturing costs in Asia compared to the UK and Europe. The relatively high level of subsidies offered to Chinese companies is another consideration.
“While these challenges heavily impact the ability to raise capital, there is still a huge demand for battery cells and raw materials in the UK and it is widely accepted that it is best to locate these industries close to the end user,” he says.
“However, there is a general conservatism when it comes to hardware and large capital outlay. In the UK, the most typical model is inward investment which supports existing overseas manufacturers to establish a base of operations in the UK. But this will not satisfy all demand.”
