Batteries will be the next frontier in industrial competition

The location of the battery superplant will shape the geography of the car industry for decades to come. Only a few places will have battery superfactories, and the race is on.

The race to develop battery technology isn't just about finding ways to make electric cars more rechargeable and easier to drive over long distances. Those are just a few of the factors in the complex game of global industrial competition and cooperation. The key question is where one of the world's most valuable manufacturing sectors, carmaking, will be located.

Here comes the electric car. About 2.5m electric vehicles are in use around the world and the international energy agency expects the number to rise to 40m to 70m by 2025, with the regulated use of traditional internal combustion engines and lower battery costs likely to fuel strong future global growth.

Tesla of the us has garnered the most attention for its smart cars and financial problems, but the global leader is clearly China, which has three-quarters of the world's electric cars.

That number is likely to rise sharply in the next decade, given the Chinese government's unparalleled ability to dictate the types of cars drivers can use. While France and the UK have set a goal of banning the sale of petrol-powered cars by 2040, it is possible to see China demand that all new light vehicles be powered by electricity by 2030. This will help improve air quality and energy security in the country's cities. China's energy security is now threatened by soaring oil imports.

Electric car batteries are made in giant superfactories. China and Japan are leading the way, and even tesla's business relies on technology from Japan's Panasonic. These plants need to be close to major automotive production centers, and now the competition is on to build the superplants that will serve the growing market. Where these superplants are chosen will shape the geography of the industry for decades to come.

People in the car industry may have mixed feelings about the transition to electric cars, but they are a less emotional bunch. All the big carmakers are starting to make models suited to different parts of the electric car market. They focus on how to make money by supplying picky European and north American consumers who want products that are convenient, look and perform well and are reasonably priced. They will use Chinese and Japanese technology to make car batteries because it is too expensive to develop new alternatives.

However, the question of where to build these vehicles is still up in the air, but the answer largely depends on where the batteries are made; The two production processes may be located close to each other.

From a business perspective, the logical choice is to locate production in areas where demand is strong and supported by policy and regulatory incentives designed to nudge consumers away from internal-combustion vehicles. A skilled workforce is needed - as tesla has discovered, producing electric cars is not easy. Land must be available; A super factory usually requires a lot of acres with space for expansion and easy transportation.

Perhaps the most important requirement is proximity to the research site. An in-depth understanding of the relevant technologies is essential for the design of the power electronics and systems management of electric vehicles, as well as the charging system (including the connection between the vehicle and the power grid).

Not many countries can meet this last requirement. Apart from the us and China, the main options are Germany, the UK and possibly France. Japan and India will try to compete with China for the Asian market.

As electric cars become more widely available, battery production will grow, and their use will expand beyond light vehicles into the transportation sector and other sectors of the energy industry, such as the power grid.

Batteries are destined to be one of the most important industries of the 21st century, and many small companies are grappling with some of the technical challenges surrounding this major product. Huge supply chains will bring lots of jobs.

The advantage of mass production means that no more than 10 places will have superfactories, and the outcome of the competition for superfactories will depend on the combination of public policy and private planning.

The battery landscape is still evolving. The U.S. and other countries may feel compelled to develop their own production technologies to limit Asian market dominance.

The government may be too distracted by brexit to implement a long-term industrial strategy that will build a market, provide skills, land and implement regulatory changes to attract investors. Germany may not be ready to accept that internal combustion engine technology dating back to KarlBenz and GottliebDaimler is being replaced.

The stakes are high -- huge investments spanning decades and lots of technology jobs. In a rapidly changing world of energy, a place at the heart of the new battery market is a glittering prize. Failure to do so would mean a serious loss of industrial power.

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