Battery Boom - Gigafactories shooting out of the ground

Perhaps the strongest evidence of the imminent breakthrough of electric cars is the exploding number of large battery factories (“gigafactories”) that are currently being built. At present, 142 gigafactories are in the planning stages, under construction or already in operation.  If those currently in the planning stage come to fruition, the number of completed gigafactories for cell production worldwide will roughly double in the coming years - at least.

The largest expansion of production capacities is taking place in China. The number of production facilities there has risen from nine to 107 since 2017, half of which are already producing batteries for electric cars. Currently, the equivalent of a battery gigafactory is being built every week in the People's Republic; however, the Chinese superiority in cell production is not without danger.

Governments and car manufacturers in Europe are now putting pressure on companies to set up their own cell production facilities on the continent. With the exception of Tesla, the USA is lagging behind. There is some evidence that the e-car pioneer is moving into cell production itself. So far, Tesla has been producing its batteries in the USA together with Panasonic. In China, however, Tesla is cooperating with CATL, the world's largest cell manufacturer.  

It is believed that Tesla ordered the necessary special machines from the Hanwha Group in Korea some time ago. There are also documents from the City of Fremont, where Tesla produces most of its vehicles, which indicate that Tesla wants to expand its production in the town - possibly for its own battery cell production. Finally, there are rumors that Tesla has already tested new cells at the Nürburgring racetrack. Tesla boss Elon Musk is expected to provide further information at Tesla’s much anticipated Battery Day on September 15.

Car manufacturers expand their business

Car manufacturers are increasingly realizing that they must control the value chain up to cell production themselves. For example, GM has set up a joint venture with LG Chem, a South Korean battery manufacturer, to build a plant in Ohio, USA. The investment volume has so far been estimated at around $2.2 billion. The factory is to be almost as big as the gigafactory of Tesla and Panasonic in Nevada.

Volkswagen has acquired a stake of around $1.1 billion in Chinese battery manufacturer Gotion High-Tech and now controls a good quarter of the shares as the largest shareholder. At the same time, the Germans are expanding their stake in QuantumScape and investing another $200 million in the American battery specialist. Daimler has now also followed suit acquiring at least a 3% stake in the Chinese cell manufacturer Farasis Energy. Terms of the acquisition are not known.

Many car manufacturers have suffered from supply bottlenecks for battery cells in recent months. These apparently include Audi, Jaguar and Kia. This illustrates the dependence on cell supply, which does not work 100% even with the still comparatively small quantities.

Now only the last step is missing: the control of the battery raw materials. China is currently buying these on a large scale worldwide and processing them further in its own country - for example to produce lithium carbonate or lithium hydroxide. However, the People's Republic repeatedly uses trade as a means of political pressure. Most recently, China banned meat imports from Australia because Canberra is demanding an independent corona investigation in Wuhan.

Securing raw materials

Europe and the USA must, therefore, not only control cell production but also the battery raw materials. This requires the construction of converters for further processing and access to deposits such as lithium in politically secure countries - for example in Australia or Canada. In a sense, China provides the blueprint for this strategy.

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