European efforts to take the lead in a battery arms race

Vasteras's role in electrical technology began almost two centuries ago. Now the Swedish town, ASEA, a light and generator manufacturer owned by ABB, a Swiss-Swedish engineering group founded in 1833, hopes to become part of the modern energy revolution.

Northvolt, a start-up that plans to produce lithium-ion batteries, announced on Friday that it will build a $100 million demonstration line and research facility in Vasteras. Peter Carlsson, founder and chief executive of Northvolt, said the site was "the first step on our long journey": building a factory that produces 32 GWh of lithium-ion battery capacity each year, and is comparable to the Asian giants that dominate the battery arms race.

Northvolt is one of 80 stakeholders in the European battery alliance, which was launched last year by MarosSefcovic, European Commission's vice president for energy, to speed up EU battery production.

Officials see battery technology as a strategic requirement in Europe, which has not yet succeeded in creating a lineup of U.S. digital giants and whose early lead in solar panel production has been overtaken by Chinese companies.

Vehicle battery technology is seen as particularly important if one of Europe's most important industries is to emerge from the Volkswagen diesel-gate scandal and remain central to the region's industrial base.

"What is really lacking is a very important feeling from the perspective of the new industrial policy of the EU," Mr. Sefcovic said. "If burning a car's engine is the most precious part of a car, it will become a battery and software in the future. "

Transport electrification is an important part of meeting the EU's commitment to the Paris climate agreement, with stricter carbon emission standards for passenger vehicles and trucks. Air quality problems in some European cities are considering banning vehicles using traditional internal combustion engines.

Electricity will also need to store energy as electricity generation-a rapid transfer from fossil fuels-and rely more on intermittent renewable energy.

Global demand for car-powered batteries is expected to rise from less than $10bn to $60bn by 2030, according to Goldman Sachs Securities. Japan's Panasonic is the world's largest producer and China is building more than half of its new battery plants, according to Simon Mores, head of the research group monitoring the lithium ion battery market. Goldman expects Asia to continue to dominate the market.

But European companies are looking to make up for lost ground. The EU initiative includes companies from the entire supply chain: BASF and the Belgian chemical group Solvay, European carmakers Volkswagen, BMW, Mercedes-Benz and Renault and the German Siemens Group. In addition to Northvolt, the German consortium TerraE and the French battery manufacturer Saft are planning to establish a battery factory in Europe.

Mr. Sefcovic said the alliance "brought a lot of promising business projects, and Northvolt is just one of them". "The 2025 market forecast is coming true, and I believe that's what investors need to know -- that European batteries are investment projects. "

Asian rivals are also building capacity in Europe. South Korean LG Chemical is building a large lithium-ion battery factory in Poland, and Samsung SDI and SKInnovation are investing in Hungary.

Mr. Carlsson, a former Tesla executive, said the EU move had helped prove that the continent needed a "battery ecosystem". The European Investment Bank and the Commission are "ensuring the first phase for us[ Funds] The key part, "he said. Northvolt still needs an additional 1.5 billion EUR to start building its planned factory in Sweden's second site.

The company announced on Friday a partnership with NemaskaLithium to supply its factory with battery-grade lithium hydroxide. The safe supply of cobalt and lithium is the focus of current battery manufacturers, although higher prices may encourage long-term investment in New mines.

Welcome to NorthVolt's plan. Mr. Sefcovic acknowledges that much remains to be done to achieve Europe's industrial and climate ambitions.

"I hope that we will have such good news every quarter or half a year(from now on) because we need 10 to 20 gigabytes of data in Europe. " he said.

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