Tomorrow’s battery solutions face changed conditions

Batteries, both for vehicles and stationary energy storage, have seen a booming market in recent years and have been identified as a key component of the energy transition. Interest in stationary batteries has grown as they are rapidly integrated into the electricity grid and they both stabilise and store renewable energy. At the same time, batteries for electric vehicles continue to develop at an explosive pace, but despite the great potential, the automotive battery industry faces challenges in Europe where costs, global competition and dependence on foreign value chains are major obstacles.

Bo Normark is an industrial strategist at EIT InnoEnergy and winner of the IVA Gold Medal of Honour 2024. He is also one of the initiators of the European Battery Alliance. An organisation whose purpose is to enable and support a strong and successful battery industry in Europe. And part of that is about ensuring that there is a complete value chain for batteries.

– You can’t really talk about the battery industry without also talking about the automotive industry, Bo Normark says, and he continues:

– Batteries are not a commodity anymore; they are a central part of the car’s powertrain. Losing the ability to make batteries means we risk losing the ability to make cars – and that’s where European competitiveness risks disappearing.

A complex competitive situation

The battery industry in Europe faces fierce competition from China and the United States, both of which provide extensive support to their domestic producers. Something that enables rapid development. European support, unlike that of China and the US, is fragmented between national and EU levels, making a coherent industrial strategy difficult.

– The big problem is that the car industry is experiencing setbacks. Just a few years ago, China and Europe sold about the same number of electric cars. Now, sales have exploded in China while slowing down in Europe. The domestic market is central to the development of the European car industry. But we need battery production in Europe. Simply buying batteries from China is not an option; if they can sell batteries they would rather sell cars, says Bo Normark.

Batteries have become core components of the powertrain, he emphasises. This increases the need to have the entire value chain for batteries in Europe. If Europe fails to build up its battery production, the entire automotive industry could become dependent on China for key components. Something that in the long run could threaten the competitiveness of European car companies.

Battery production needs and value chain

Bo Normark talks about the complexity of production and how different elements within the value chain, such as anodes and cathodes, are much more difficult to manufacture than many first thought. Many battery manufacturers assemble ready-made parts that are bought from subcontractors, which simplifies the manufacturing process but means that a few players control the supply of key components such as cathodes. Northvolt’s initial ambition was to manufacture cathodes themselves to create greater value and control, but this proved technically difficult and eventually led to a shift in focus.

– Northvolt has had to take a step back. Instead of manufacturing cathodes themselves, they now focus on battery cells and recycling. It’s a realistic strategy given the complexity, but creating an entire value chain in Europe is still crucial in the long run, says Bo Normark.

Northvolt’s journey illustrates the difficulties and risks of creating a domestic battery production in Europe without sufficient support. The fact that they had to change their strategy shows how complicated it is to become self-sufficient in battery components.

– To compete globally, Europe needs to find ways to better support its battery industry, otherwise there is a risk that production will move to markets with higher government support, which could lead to a long-term dependence on China and the US in battery technology, says Bo Normark.

For Europe to compete in the battery sector and protect its automotive industry, more strategic cooperation is needed at EU level, as well as a better understanding of the importance of automotive battery production.

The emergence of the stationary battery market

If we shift our focus to the growing stationary market instead, it shows a positive trend that can reduce climate impact and strengthen the resilience of energy systems. Those who have gone first have simply not faced the same setbacks.

– The importance of battery technology for the automotive and energy sectors underlines the need to address the ‘first mover disadvantage’, where early entrants face high upfront costs that may require support to become competitive in a global economy, according to Bo Normark.

He says the market for stationary batteries, devices used to store energy on the grid rather than to power vehicles, has exceeded expectations and grown rapidly. Prices have fallen and this is further accelerating the trend, and today stationary battery prices are already at the levels first forecast for 2030.

– Stationary energy storage has exploded on the market. Today, we have the expected prices we thought would only be reached in 2030, and this means that the market is growing enormously fast. Sweden will install about 1,000 megawatts of stationary batteries this year. California has already installed 13,000 megawatts of battery capacity in just three years. They have a plan to have a 100% renewable electricity system by 2045, and batteries will be central to that system, says Bo Normark.

He believes that the European market for stationary storage will develop in the same way and that in the future more households may have their own storage capacity. This would reduce dependence on expanding the centralised electricity grid and increase the resilience of energy supply.

– In my dream world, every household and neighbourhood will have its own storage capacity, so that they can sustain themselves for 24 hours. This would revolutionise the transmission system, as there would no longer be a need for such a high level of security of supply from the central grid – everyone would be self-sufficient in emergencies. There is also new technology such as sodium batteries, where materials such as cobalt and nickel can be avoided. This opens the door to extremely cheap batteries in the future and makes stationary storage even more sustainable and economical, Bo Normark concludes.

Elfack will take place at the Swedish Exhibition & Congress Centre in Gothenburg from 6 to 9 May. Bo Normark will take the stage to talk about the development, potential and requirements for batteries. Elfack brings the industry together and provides an opportunity to take a common approach and gather strength around the sustainable energy system of the future – in which batteries play a central role.

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