Autos Investment Round-Up: Onshoring Of Battery Manufacturing Reduces Autos Supply Chain Risks

Fitch Solutions / Autos / Europe / Tue 09 Aug, 2022

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Key View

  • In our Q222 autos investment round-up for Western Europe, announcements featured new plans to build Gigafactories and battery-recycling facilities, as the sub-region advances on its path towards the decarbonisation of mobility.
  • The trend toward the onshoring of battery manufacturing keeps developing in the sub-region, supporting the expansion of the EV supply chain and benefitting carmakers through the de-risking of the autos supply chain.
  • Automakers and EV battery manufacturers build new battery plants for electric commercial vehicles such as heavy trucks and buses, to benefit from the upcoming higher EV adoption among fleet operators.

In our regular round-up of production investments, we track the latest projects from the production side of the industry and analyse regional trends that we see developing. In doing so, we hope to build a picture of any potential hubs that may be developing, as well as company strategy in terms of production bases and export programmes.

Western Europe - Autos Production Investment
Date Announced Country City/ State/ Region Company Value Category Brief Description Date Onstream
Apr-22 Switzerland TBC Swiss Clean Battery CHF246.0mn (USD255.8mn) EV Supply Chain The Swiss-based firm announced its plan to build a solid-state battery plant which will have a capacity of 7.2mn battery cells per annum. 2024
Apr-22 UK n/a Switch Mobility GBP300.0mn (USD363.0mn) Electric Vehicles The Indian EV automaker (subsidiary of Ashok Leyland) announced investments in the UK and India to develop its offering in the electric buses and light commercial vehicle segments. n/a
May-22 Spain Catalonia ILJIN Materials EUR600.0mn (USD612.0mn) EV Supply Chain The South Korean firm, manufacturer of elecfoil (key component used in electronic products and a component used in EV batteries) announced its plan to open its first manufacturing facility in Europe. 2024
May-22 Norway Fredrikstad Hydrovolt n/a EV Supply Chain The firm (a joint venture between Northvolt & Hydro) opened its battery-recycling plant with a capacity to process 12,000 tonnes of battery packs per annum (which equals around 25,000 EV batteries). Operational
May-22 Belgium Ghent Volvo Trucks n/a EV Supply Chain The Sweden-based automaker opened its first battery assembly plant for its electric heavy trucks. Operational
May-22 France Poitiers Forsee Power n/a EV Supply Chain The French battery producer inaugurated its production site which holds five assembly lines for batteries used in electric buses. Current production capacity is 1GWh, able to supply batteries to around 2,500 electric buses. Operational
Jun-22 Spain Extremadura Envision AESC EUR1.0bn (USD1.02bn) EV Supply Chain The Chinese green technology firm has created a consortium with 11 entities to construct a battery plant in Spain (as part of the country's PERTE programme) that will have an initial capacity of 10GWh. 2025
Jun-22 Germany Thuringia LION E-Mobility n/a EV Supply Chain The manufacturer of electrical energy storage batteries and lithium-ion batteries has signed a contract for a plant in southern Thuringia. 2024
Jun-22 Germany Landshut BMW EUR125.0mn (USD127.5mn) Components The German automaker communicated that it plans to invest in component innovation at its Landshut plant, the largest from the automotive group. 2022
Jun-22 Norway Mo i Rana Freyr Battery USD1.7bn EV Supply Chain The battery cells firm communicated that its Board approved the expansion of the planned Giga Arctic project to 29GWh. The plan foresees the building of eight production lines and a battery testing centre. Norway's government will grant EUR400mn in financial assistance (loans and guarantees). n/a
Jun-22 United Kingdom n/a Britishvolt & POSCO Chemical n/a EV Supply Chain The South Korean steel-making firm and the British battery technology developer signed an MoU to jointly develop battery materials to be used in Britishvolt's batteries. n/a
Jun-22 Germany Brandenburg BASF n/a EV Supply Chain The leading chemical firm will construct a battery recycling facility with the capacity to process 15,000 tonnes of batteries per year. 2024
Jun-22 n/a n/a Stellantis EUR50.0mn (USD51.0mn) EV Supply Chain The carmaker announced that it will buy an 8% stake in Vulcan Energy Resources, a German-Australian mining company start-up. Stellantis is now the firm's second largest shareholder and also extended its agreement for the supply of lithium to 10 years. n/a
Jun-22 UK Coventry REE Automotive n/a EV Supply Chain The Israeli-based start-up announced that it will construct an assembly plant where rolling chassis for electric CVs will be manufactured. Initial capacity will be 10,000 vehicle sets. 2022
Jun-22 Germany Hallstadt Michelin EUR37.0mn (USD37.7mn) Components The tyre manufacturer will transform its plant, adapting it to the new mobility needs from the northern Bavarian automobile industry, such as digitalization, AI, and sustainable mobility (hydrogen and electro-mobility). 2023
Jun-22 Austria Steyr BMW EUR1.0bn (USD1.02bn) Electric Vehicles German carmaker announced that will electrify its Steyr plant, investing to produce its eDrive technology (found in BMW’s i and plug-in hybrid models). Annual capacity will be 600,000 units per annum. 2025
Jun-22 France Alsace Viridian n/a EV Supply Chain The firm will construct the first battery-grade lithium production plant in France. The plant's production capacity by 2025 will be 25,000 tonnes per annum of battery grade lithium hydroxide. 2025
Jun-22 Germany Nuremberg MAN Truck & Bus EUR100.0mn (USD102.0mn) EV Supply Chain The automaker will establish a large-scale facility where high-voltage batteries for electric trucks and buses will be produced 2025
Note: na = not available, EV = Electric Vehicle, MoU = Memorandum of Understanding. Source: Fitch Solutions

In Q222, we identified 18 autos-related production investments that were either announced or inaugurated in Western Europe during the period, down from 22 identified in the previous quarter (Q122) but up from 11 projects tracked in Q221. In terms of investment value, the projects revealing financial details in Q222 totalled USD5.3bn, below the USD40.0bn and USD8.0bn worth of projects revealing financial details in Q122 and Q221 respectively.

Latest Gigafactory Announcements Evidence Battery Manufacturing Onshoring Trend

This quarter, we have tracked four investment announcements of EV battery manufacturers planning to expand or build new battery production capacity in Western Europe, evidencing that the trend towards the onshoring of battery manufacturing keeps developing in the sub-region and supporting the expansion of the EV supply chain. By building battery manufacturing capacity in Western Europe, the autos supply chain is de-risked as carmakers benefit from significantly lower logistic risks since they are less exposed to shipping delays and other supply chain disruptions. This is important for carmakers, particularly when considering that the vast majority of European EV sales in the coming decade will take place in Western Europe, with EV demand exponentially growing on the back of supportive EV policies, high incomes and a comparatively well-developed EV charging infrastructure network. Envision AESC, a large producer of lithium-ion batteries based in Mainland China, announced a EUR1bn investment to construct a Gigafactory in Spain, applying for funding under the Spanish Strategic Project for the Recovery and Economic Transformation programme (PERTE).

New Battery Plants For Electric Commercial Vehicles Gearing Up For Increased Demand

This quarter, we have seen new battery-related investments in Western Europe, as automakers and EV battery manufacturers position themselves to benefit from the upcoming higher EV adoption among fleet operators. This is because fleet operators will increasingly demand EVs, as the generous EV incentives that most European nations offer to businesses for the purchase of heavy commercial vehicles make the transition from internal combustion engines fleets to EVs more affordable and financially viable. The broad installation of EV charging points across Western Europe exhibited since 2020, as well as the increased focus to establish charging networks along logistics routes, will also bolster demand for electric trucks and buses, accelerating the electrification of these vehicle segments. We believe that Forsee Power’s new 1GWh battery manufacturing plant for electric buses reflects how EV battery manufacturers anticipate the strong growth that the segment will realise over the coming years. This is because the plant is able to supply batteries to around 2,500 electric buses, which is three quarters of the total electric buses sold in all of Europe in 2021 (around 3,300 units).

This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 ('FSG'). FSG is an affiliate of Fitch Ratings Inc. ('Fitch Ratings'). FSG is solely responsible for the content of this report, without any input from Fitch Ratings. Copyright © 2021 Fitch Solutions Group Limited. © Fitch Solutions Group Limited All rights reserved. 30 North Colonnade, London E14 5GN, UK.

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