Expanding Battery Plants in Europe
The three Korean battery companies that have announced large-scale investment plans in North America are now turning their eyes to the European market.
LG Energy Solution is promoting a plan to expand the production capacity of pouch-type batteries at its Wroclaw plant in Poland and establish a separate base for cylindrical battery production in Europe. It intends to boost its production capacity to more than 100 gigawatt hours (GWh) by 2025 by significantly increasing its battery production capacity in Europe. The company plans to double the production facilities at its Polish plant that produce batteries for Ford by 2023 and continue to expand its facilities sequentially. In order to maximize investment efficiency, the company decided to utilize existing production lines and upgrade facilities.
SK On has recently succeeded in raising US$2 billion through close consultations with German trade insurance agency Euler Hermes, Korea Trade Insurance Corp., and the Export-Import Bank of Korea. The company plans to use the funds for the construction of its third European plant in Ivancsa, Hungary. The plant requires an investment of 3.31 trillion won and will produce pouch-type batteries totaling 30GWh a year, a volume enough to power 430,000 electric vehicles, from 2024.
Samsung SDI will begin mass production at its second factory in Goed, Hungary, in the second half of this year, and begin to sell high value-added mid-to-large battery Gen 5 in earnest. The plant's production capacity is expected to jump from 13GWh in 2020 to 24GWh in 2021 and 37GWh in 2022. In particular, Samsung SDI is discussing the supply of 46-pi batteries (cylindrical batteries with a diameter of 46 mm) with BMW, so there is a possibility of large-scale expansion in the future.
According to the Korea Automotive Technology Institute, sales of pure electric vehicles in Europe from 2018 to 2021 increased at an average annual rate of 77.3 percent. In particular, the proportion of pure electric vehicle sales in Europe jumped to 35.3 percent in 2020, significantly surpassing the United States (11.7 percent) and Korea (2.1 percent). According to the International Energy Agency, the European electric vehicle market is expected to grow from 1.4 million units in 2020 to 5.7 million units in 2025 and 13.3 million units in 2030.
However, the rapid growth of the battery market may slow down as some countries, such as Germany, the United Kingdom, and Norway, have recently put the brakes on a transition to electric vehicles. The German government announced that it would phase out subsidies for electric vehicles and ultimately cut them completely. The British government abolished electric vehicle subsidies this year, 11 years after they were introduced in 2011.