Materials, Parts, Equipment
With regard to batteries, the mood is changing in Europe, which has been pushing for battery self-sufficiency to lower its dependence on Korea for batteries. With the proliferation of startup battery companies in Europe, demand for battery materials is expected to surge there. Faced with technological limitations while trying to surpass Korea, Europe is eyeing Korean battery material, component, and equipment companies.
According to industry sources and KOTRA on July 4, more than 20 battery projects are being promoted in Germany, Europe’s No. 1 manufacturing powerhouse. Except for Tesla in the United States and CATL, Farasys and SVOLT in China, most of them are startup battery companies in Germany and other European countries. They range from the Automotive Cell Company (ACC) which received investment from French-German capital including Stellantis, Schaaf, and Benz to BMW and Volkswagen (Germany), Northvolt (Sweden), and Blackstone (Switzerland). If all goes well according to the plan, Europe will have up to 500 GWh of production capacity by 2026.
The EU set up a self-sufficiency strategy aims to reduce its reliance on East Asian batteries. The charge was led by Germany, France, Sweden, Poland, Finland, Belgium, and Italy, all of which have global automotive brands. Germany contributed the most with 1.25 billion euros (US$1.36 billion), followed by France and Italy with 960 million and 570 million euros, respectively. The EU also spent 3.2 billion euros. At the time, Korea virtually dominated the European EV battery market, so the strategy virtually aimed to exclude Korean batteries, analysts say.
New battery companies will mushroom not only in Eastern Europe, on which LG Energy Solutions (Poland) and Samsung SDI-SKON (Hungary) are focusing, but in Western Europe too, where land prices and labor costs are high. Big battery plants are expected to be built in major countries from 2026 through 2028, including Norway (125 GWh) where Freyr and Morrow are located, France (130 GWh) where the nation’s first battery plant of 40 GWh went live, and Italy (80 GWh) where one of Stellantis’ five global factories is located. Although they are still just planned capacities, they eclipse the EU’s previous forecast of 968 GWh in 2030.
Startup battery companies in Europe began the operation of their battery plants or are close to breaking ground for them. But battery materials, components and equipment are causing them headaches. They need to build unprecedented battery value chains as internal combustion engine-centric automotive factories change into those for electric vehicles. They have been focusing on investing in the battery cell business directly related to electric vehicle factories so they are struggling to secure battery materials, components and equipment. “In the battery industry, developing technology is a big challenge but the battery industry has low barriers to entry at the basic level,” explained an official of a Korean battery material company. “On the other hand, hurdles are high at the battery material market even in the entry stage and the market is not easy to enter.”
These startup battery companies in Europe are therefore paying a lot of attention to Korea. Even though Chinese battery companies’ localization strategy has significantly increased the export volume of Chinese battery makers to Europe, they are applying themselves to promoting cooperation with Korean companies. This is because Korean companies of the four core battery materials (anode materials, cathode materials, separators, and electrolytes) have bases in Europe or are preparing to do so, making it easier for them to respond if the EU decides to require them to use materials produced in Europe after the Core Raw Materials Act (CRMA) goes into effect.
LG Chem, POSCO Future M, EcoPro, and SKIET are engaging in business in Europe or preparing to do so. Apart from the four core materials, SK Nexilis and Lotte Materials are expanding copper foil production facilities, and Sungil High Tech is running a waste battery business in Europe. Experts say that Korean companies of major battery materials other than the above-mentioned items will also accelerate their entry into Europe.
Korean battery parts and equipment companies are zeroing in on exports rather than localization. Most of the facilities for battery production processes are set up by small and medium-sized enterprises. Most of the European battery makers are promoting the introduction of smart factories, which will give Korean battery equipment companies benefits. One good example is SFA, a Korean company that produces battery test equipment that shortens the inspection time to four seconds per cell compared to around seven minutes for their Chinese competitors. Another is Shinsung E&G with a technology that maintains a certain level of moisture inside a battery factory as batteries are vulnerable to it. In addition to these companies, TSI, Shinjin Mtec, and Cowin Tech are ramping up their collaboration with Europe.
Freyr in Norway was founded in 2019. It is building a factory in Moi Rana, Norway, and working on a battery project in Vassa, Finland. Tom Einar Jensen, CEO of Freyr, said, “Korea has high technological power not only in battery cells but also in battery materials, components, and equipment. Collaboration with Korean value chain companies holds the key to the evolution of the European battery industry.”
“It is bootless to compare European companies that are just starting to toddle with Korea, which is an advanced battery powerhouse,” Fraunhofer’s Dr. Jonas Henschel told local media outlets during the Smarter E Europe, Europe’s largest energy exhibition, which ran in Munich, Germany, from July 14-16 (local time). “We expect that the electrification process will create a market and complete Europe’s unique EV-battery value chain, and Korean battery makers with a presence in Europe will play an important role.” Fraunhofer is a federally funded German research institute and one of Europe’s largest applied research organizations.
“I think that the battery industry requires much more advanced technology than the traditional manufacturing industry,” Henschel added. “While China is emerging strongly through a price war, Korea and Japan are gradually scaling up production based on advanced technology. Korea has secured a unique position to differentiate itself from China and Japan by being competitive in both battery technology and volume production. Based on this fact, Korea has built large-scale production lines in Hungary and Poland, so it will be able to play a key role in Europe’s electrification process.”