Market Trends of Europe Battery Industry
Automotive Segment Expected to Hold Significant Share
- The automotive sector is expected to be one of the major end-user segments for lithium-ion batteries in the near future. The penetration of electric vehicles is anticipated to provide a massive impetus for the lithium-ion battery industry's growth.
- Various vehicle types are now available globally, featuring increasing degrees of hybridization and electrification. There are various types of vehicles, including hybrid electric vehicles (HEVs), plug-in hybrid electric vehicles, and electric vehicles (EVs).
- As the initiator of the Paris Climate Pact, Europe promoted the shift from internal combustion vehicles to EVs and has registered high growth over the recent period.
- In May 2023, France announced to launch its first battery factory for electric cars. Construction of the battery industry is under the reindustrialisation' plan for France. The 'gigafactory' opening in Billy-Berclau is owned by Automotive Cells Company, a partnership between energy giant TotalEnergies, Mercedes-Benz and Stellantis, which produces a range of brands including Fiat, Peugeot, and Chrysler.
- Further, electric vehicle battery manufacturing has also gained momentum in Sweden in recent years. The Swedish lithium-ion battery manufacturer, Northvolt, raised around USD 2.75 billion in June 2021 to expand its factory in Northern Sweden to keep up with the growing demand for electric cars.
- According to the Ministry of Ecological Transition and Territorial Cohesion, approximately 402,700 battery electric vehicles were part of the French fleet of private cars in 2022, an increase of 64.4% over 2021.
- Therefore, owing to the above points, the automotive segment is expected to dominate the European battery market during the forecast period.
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Germany to Witness Significant Growth
- Moreover, the automobile industry in Germany is one of the country's largest and most significant industries. German car manufacturers are known for producing high-quality, innovative, popular vehicles worldwide. The German government has played an important role in supporting the automobile industry, providing financial incentives for research and development, and promoting policies encouraging electric vehicle adoption.
- According to Federal Motor Transport Authority, Germany has seen a significant increase in the number of new electric cars registered in recent years. So far, in 2022, 470,559 new electric cars have been registered, representing a growth of 32.19% compared with the previous year's figures.
- Germany has been attracting investments from other countries worldwide to develop lithium-ion battery manufacturing facilities. For instance, in March 2023, Mercedes-Benz announced to set up green battery recycling factory in Germany. The plant will have an annual capacity of 2500 tonnes and will contribute to the production of more than 50,000 battery modules for new electric vehicles of the company.
- The country is expected to have fourteen million electric cars on the road by 2030, which is 40% higher than the country's previous target set for 2030, mainly due to attempts to comply with increasingly stringent emissions rules, leading to a rise in electric vehicle sales. Moreover, the country's government's target of reaching one million electric vehicles by 2020 was met in July 2021.
- Moreover, there has been large-scale adoption of solar power in the country. According to Germany's Renewable Energy Act (EEG), the country has set a target of achieving a share of 40-45% of renewable energy sources out of the total energy consumption in the country by 2025. As a result, there has been significant growth in solar installed capacity, as seen in the chart beside.
- As a result, owing to the increasing demand from the automotive and renewable sectors, the battery demand in Germany will likely witness significant growth in the coming years.
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