Electric vehicles and the battery issue
The automotive industry is going electric. In Europe, VW, Daimler, and Volvo have all committed to reaching a 50% electric vehicle (EV) sales share by 2030.13 Pricewaterhouse-Coopers (PWC) estimates that in 2021, the EU was at 8%, China 12%, and the US 2%. In 2030, with a projected EV total production share of 65%, the EU is expected to top the China EV percentage of 56%, with the US lagging around 26%. The demand for batteries will be huge and is projected to grow at a compounded annual growth rate (CAGR) of 34% from 2021–2030.14
All regions are striving for self-sufficiency, which means huge investments ahead. China is in the driver’s seat given the fact that they have the leading battery producers Contemporary Amperex Technology (CATL) and BYD. These companies have a combined global share of around 45%,15 a huge amount of scale production knowledge, and a large amount of the raw materials and processing capacity.
By 2025, the EU hopes that 30% of cars produced will be EVs. Yet it is home to only 7% of battery production capacity and has almost no critical material production or processing facilities.16
To date, announced capacity additions suggest that the US is likely to suffer a 40% capacity shortfall in 2030.16 It should come as no surprise that the Inflation Reduction Act in the US offers various tax and production credits across the entire battery supply chain, from mineral mining and processing to battery production, assembly, and recycling of key materials. It seems clear that the US will speed up its battery capacity additions. Will this take planned capacity away from Europe? Initial political rumblings in Germany and France suggest that they believe the EU will need to do more. Either way, a lot of capital expenditure (capex) is coming – PWC estimate up to USD 300 bn.16
This discussion is relevant to robotics as both battery production and EV assembly lend themselves to automation. With an huge anticipated investment in batteries in Europe, there is a big opportunity for European champions to emerge. After all, Europe is home to many major car companies and suppliers.
We are also starting to see alliances form. For example, Duerr Group, a major supplier of robotics solutions to the automotive industry, has expertise in battery electrode production and is also a world leader in automation technology for coating, drying, and solvent recovery. Others are better at battery cell and pack assembly, however. As a result, they have formed a three-pronged German alliance together with Grob-Werke and Manz AG in order to offer a full solution to car companies. This pooled expertise allows for greater technology refinement potential and a focus on cost reduction to increase competitiveness with Asian suppliers.