Will We Drive Electric on Asian Batteries? The Energy Editorial, December 2010
The development of the electric car market, supported by public funding, needs to be monitored closely. Currently, except for Renault benefiting from its electric partnership with Nissan, batteries for electric vehicles will most likely be outsourced. A lot of joint ventures are being signed with Asian battery companies and automotive suppliers. As a consequence, some argue that there is no rational to develop further and fund the European battery industry: batteries are already made more cheaply elsewhere.
Well, indeed, if the future of the car sector will be based on the interdependencies of Europe and its international competitors and if the battery is a key added value of electric cars, dependence on batteries manufacturers located outside Europe, will increase. Fair enough - if that is the desired result. But the battery is the key for the future success of cars electrification, a path we already have embarked through hybridization. Battery technology breakthroughs could well set the game for the future of the car market. If metal-air becomes a reality, then electric cars will be competitive. The question is the timing and what the market will decide. But the US, Japan and China apparently believe in it.
China has a strategy. Dependence on Chinese batteries could set the fox to mind the geese. In principle, there is no problem in outsourcing a component. Yet, China thinks of the electric vehicle as a way to invade the European market. Handicapped in classic motorization, china with its $15 billion collective plan seeks to build its strategy on lithium batteries technology, the heart of electric vehicle’s competitiveness. Chinese products are said not to be ready. Recently, Chinese carmakers had to reveal that driving ranges were half of what the market expected, reflecting that there are still weaknesses in battery technology. Winning a place in foreign markets is just another benefit for the Chinese who will already use their internal grow to rapidly advance battery technology. This is why the government is using its internal growth to strengthen its hand in other markets. World manufacturers all have an interest in gaining access to the Chinese rapidly expanding market which is supposed to increase by a factor of 10 from 2005 to 2030, to escape the stagnation and decrease in industrialized countries" sales. But China has secured a 49% cap on foreign ownership of cars manufacturers. Foreign manufacturers will be forced to enter joint ventures with Chinese companies to sell their cars, and under Chinese joint ventures regulation, they will be forced to share technologies. China is not the only competitor that Europe will encounter in its own market if the car market moves towards electrification. Korea as well, and Asia in general, ranks among the main worldwide producers of batteries (second behind Japan) with companies like LG Cham, Samsung and SK Energy. The country also recently signed a free trade pact with the EU and another is nearly complete with the US. The second issue is that batteries could well be designed and manufactured in Asia too - Europe has few skills in this area. This could lead to lost jobs. Gambling on Green competitiveness could end up benefiting Asian growth.