Battery producers’ competing models
More than 30 ‘gigafactories’ – major manufacturing sites, producing electric batteries to be used in both electric vehicles and static storage – have been announced for the US and Europe since 2020. Combined, they would deliver a capacity of more than 1.5bn gigawatt hours (GWh).
Battery developers and producers are adopting a range of approaches in different regions. Each faces what one panelist at the Global Battery Value Chain Conference described as a “juggling act” to get their companies running and profitable.
Their success is essential if the west is to achieve independent energy supplies. However, the challenges of realizing such a hugely capital intensive project are vast.
Expertise is critical to success
Morrow Batteries is one of several companies in Scandinavia to have achieved early success in this field.
Its CEO, Lars Christian Bacher, told the conference that banks needed to see offtake arrangements, but this was often not feasible until new technologies had been validated. “So it’s like a juggling act to get the company to this stage,” he said, “and rolling at high pace.”
Bacher pointed to what he sees as an even more important success factor: “Everybody talks about capital, but I think you need to look at the human capital.” A company would only succeed with people in key positions who had experience of making battery technology work.
Stefan Suppa, VP of Corporate Development and Strategic Planning at US-based Our Next Energy, agreed. His team’s experience has been key to building a manufacturing business at speed, he said: “22% of the team has previously worked together. We have, for example, somebody that worked on the first battery project at Ford in 1979.”
Learning lessons from Britishvolt
One firm that fell foul of the gigafactory challenges was Britishvolt. After its plan for a £4bn EV battery plant in Northeast England collapsed and the company went into administration, it was bought by Australian company Recharge Industries.
CEO Tony Laydon told the conference that the new outfit’s strategy was to focus on batteries for static storage at the outset. However, the ultimate goal would be to focus on IP development for the automotive market, for which there was higher UK and European demand.
Laydon said the UK was not yet supportive enough to enable the country to be competitive in the sector. He did not support long-term grants and subsidies, “but to try and initiate this level of energy transition, it needs an stimulus and a catalyst to allow us to optimize the value chain.”
While some would term this protectionism, he said: “You only have protectionism when you’ve got something to protect. We don’t have it yet.”
Bacher said investors and analysts needed to look at the reasons for company successes and failures. Morrow Batteries had examined the Britishvolt case. While he was sorry for the job losses that resulted, “it’s also a good thing that some companies go under, because we all learn from it.”
“You only have protectionism when you’ve got something to protect. We [the UK] don’t have it yet.”
TONY LAYDON, CEO, RECHARGE INDUSTRIES
Sourcing critical materials
With commodity process soaring, panelists focused on the challenge of sourcing key cathode active materials from outside Asia.
As Bacher pointed out, it was essential to derisk the entire value chain leading up to manufacture: “It doesn’t help to buy batteries from a European company producing batteries in Europe, if your whole supply chain is out of China or Asia.”
Florian Wolf, CFO at battery developer Innolith, said there were two options: “The prices of the commodities will either come down a lot – which I’m not sure anyone is really expecting – or you can use these commodities in a more efficient way.”
“It doesn’t help to buy batteries from a European company, if your whole supply chain is out of China or Asia.”
LARS CHRISTIAN BACHER, CEO, MORROW BATTERIES
Innolith’s new electrolyte technology was designed to address this issue. It would allow batteries to be charged at higher voltage, so that expensive material such as cobalt was used more efficiently: “This goes directly to the bottom line of companies and ultimately, consumers.”
Our Next Energy is partnering with proven material suppliers, including in US Free Trade Agreement countries, Suppa said. “We’ve identified lithium as a material lever in our operating model,” he added, “so we’re looking at creative ways to work with lithium producers and support building this supply chain in North America.”
“The prices of the commodities will either come down a lot – which I’m not sure anyone is really expecting – or you can use these commodities in a more efficient way.”
FLORIAN WOLF, CFO, INNOLITH
Alternative routes to market
Approaches in the sector vary from licensing technology to full production. For Innolith, said Wolf, the former approach has the benefit of getting to market more quickly, but the ultimate goal is to produce batteries, Wolf said: “Because of our IP protection, both models can be highly attractive from a profitability point of view.”
Investment options are also open. Suppa said Our Next Energy is looking to upstream mining companies as well as downstream strategics for its next capital funding round.
Whatever route is taken, the industry is at en exciting point, Suppa added. “In the US and globally, we’re at an intersection of superior technology, early innings of adoption, and policy tailwinds,” he said. “And you have a combination of both the private and public sector committed to growing this industry.”
“In the US and globally, we’re at an intersection of superior technology, early innings of adoption, and policy tailwinds.”
STEFAN SUPPA, VP OF CORPORATE DEVELOPMENT AND STRATEGIC PLANNING, OUR NEXT ENERGY
