Poland to be home to Europe’s largest lithium-ion battery factory

Poland to be home to Europe's largest lithium-ion battery factory

The move toward electric vehicles is gathering pace. Korean chemicals giant, LG Chem, has announced the opening of a new $1.63billion battery factory in Poland to serve the European market. It will be located near Wroclaw and will produce 100,000 lithium EV batteries per annum.

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That is still just a fraction of Europe’s projected demand, but Swiss engineering group ABB has also announced an even larger manufacturing plant to be built somewhere in Sweden. Joining them will be a third plant, to be built by Swedish company Northvolt, who are seeking EU assistance to raise the €4billion needed, possibly by issuing green bonds. Between them, the three plants will eventually produce around 70 gigawatt hours of capacity annually (about 1.8 million batteries per year).

Electric cars leading the curve

These confident developments follow very explicit commitments to move to electric vehicles from European governments, particularly in the UK and France. Electric vehicles will need half of all battery capacity by the end of 2021 and a growing majority of it thereafter.

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European vehicle manufacturers, especially in Germany, are fuelling the bullish market by announcing dozens of electric vehicle development and research projects. Volkswagen, whose main car production plant is only 120 miles from Wroclaw, has already committed to producing at least 25 electric models within the next few years, and BMW, Volvo and Daimler have similar plans.

Falling prices

The good news for all drivers is that increased capacity will mean lower prices. At the moment, most batteries are still imported from China and South Korea, but the market has already seen considerable downward pressure on traditional car battery prices. Currently, prices begin at under £50 (see for example http://www.grovesbatteries.co.uk/Car-Battery.aspx).

According to a Barclays survey, on average, battery consumption costs worked out to about $1000 per kilowatt hour in 2010, but only $227 by 2016 and they could halve again by 2025. In 2016, only 0.2% of new car sales were for electric vehicles, but within ten years, it is expected to be 10% and rising. Although battery demand will increase with it, world reserves of lithium are much greater than world reserves of petroleum.

Britain and France have said that production of petrol driven vehicles will be banned by 2040, because of air pollution and global warming problems. Diesel engines will be phased out even sooner.

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