JP Casey (JPC): How has China come to dominate battery manufacturing?
Staffan Södergård (SS): China has certainly seized momentum in lithium-ion battery production in recent years. In early 2019, for example, BloombergNEF placed 73% of global lithium cell manufacturing capacity in China.
Crucially, China is a leading market for electric vehicles (EV) with new EV sales supported by a government credit scheme, a part of Beijing’s strategy to reduce energy imports, clean up air quality and build its domestic auto industry. As a vital part of the EV supply chain, Chinese lithium-ion battery manufacturers also receive government support – which has been essential to their growth, given the large capital investment required to establish large-scale factories.
JPC: What is the Northvolt Ett factory, and what do you expect it to change in the sector?
SS: Northvolt Ett is the blueprint factory for the lithium-ion battery industry in Europe. It is the proving ground for large-scale sustainable battery production. The lessons learned here will help speed-up the development of the industry to meet the huge potential demand. Scalability is therefore one of the crucial aspects of Northvolt Ett. With EV demand surging in Europe, building enough lithium-ion battery factories, quickly enough, is going to a real challenge. Realistically, it is going to be a bottleneck for the next five to ten years in terms of providing European-made products to the market.
The work we are doing with Northvolt is designed to help reduce that bottleneck and facilitate the rapid expansion of Europe’s manufacturing capacity. Northvolt itself has some aggressive targets to scale up and we are helping to meet them. At Northvolt Ett, the plans go from 8GWh to 32GW by 2024 and up to 40GWh after that. The company also has a joint venture in place to establish a second factory – Northvolt Zwei – with Volkswagen at Salzgitter in Germany. Construction is expected to begin with an initial capacity of 20GWh in early 2024.
The speed and extent of expansion that is being seen at Northvolt, and is likely within the wider European lithium-ion battery sector, will bring benefits to the communities and regions that play host to these developments – not least in terms of providing high-skilled employment. Capital-intensive projects on this scale are few and far between in Europe and there are more than 400 GWh in announced plans for gigafactories in Europe. The economic impacts that will accrue from building this strategically important industry will be huge.
JPC: What challenges have you faced in the development of the factory, and how have you overcome them?
SS: Factories on this scale have not been seen before in Europe. As such, there are bound to be unexpected situations that arise during its development. There are going to be times when we will have to adapt and learn as you go – especially as we are working in a particularly dynamic market environment. At both ABB and Northvolt, we have a culture that facilitates this type of fast thinking and problem solving in response to any challenges that may come our way.
Bear in mind that, even though 8GW is a large facility, it covers about 1% of potential demand from the European auto industry for passenger car production. That does not take into account demand from heavy transportation, let alone other sectors, such as energy. Although Northvolt Ett will be scaled up to 40GW, it will still be a drop in the ocean of potential demand.
It is therefore vital that we get this right because we are in a position to determine the path of a whole industry. We have already been working with Northvolt since 2017, when we signed a memorandum of understanding for a wide-ranging supply and technology partnership. This included complete electrification, instrumentation and process control for both Northvolt Ett and Northvolt Labs, a smaller facility that will house a 350MWh demonstration manufacturing line, where the company can work with customers to develop battery cells for mass production. We are currently supporting Northvolt in fine-tuning and optimisation of the process at Northvolt Labs.
JPC: Do you think projects such as these could help shift the balance in the global battery industry?
SS: Looking forward, our partnership with Northvolt really aims to drive industry development in Europe. We already have some exciting collaborative R&D projects on the go – especially related to recycling batteries at the end of life. If you consider that Tesla’s batteries are covered for a period of eight years or between 100,000 miles (160,000km) and 150,000 miles (240,000km), depending on the model, even accounting for developments that extend battery life, there will be a huge amount of waste material produced in the form of spent batteries. With circular economy principals becoming increasingly important, especially in the EU, you are going to need to handle that waste in a responsible and sustainable way. Recycling is the way to go there. That is one of Northvolt’s priorities and we are proud to partner with them to drive that change.
Europe – the second largest market for new EV sales and with its own substantial domestic auto manufacturing capacity – is now waking up to the strategic importance of developing its own lithium-ion battery manufacturing capacity. Given the role lithium-ion batteries will play in decarbonising not only the transportation sector, but also the energy sector, where energy storage technologies are needed to support high levels of intermittent renewable generation, securing European supply of lithium-ion batteries is crucial to meeting the continent’s climate goals.
It is an exciting time in the lithium-ion battery space in Europe. We are establishing an industry – so what we do now will have real consequences far beyond our work with Northvolt. I see a boom coming in the next five to ten years and we are at the front end of that. It is a very rare opportunity that few will experience in their careers. More broadly, it will make a real contribution to the decarbonization efforts that are so crucial in minimizing the effects of climate change. It just highlights the importance of what we are doing.