Insight 01/2019: Battery supply chain – Roles for Europe and Finland?

The global battery and electric vehicle (EV) supply chain is at a crossroads. With 100s of forthcoming EV premieres by major manufacturers in 2020–2025, the phenomenon is about to go mainstream. Optimistic scenarios suggest that, by 2030, every second new passenger car sold globally could be an EV. Even a more realistic EV share of one-fifth suggests that the global automotive industry is about to undergo its most significant techno-economic transition yet.

The automotive industry is strategically important in many developed countries and the sector has political clout even beyond its economic significance. When it comes to geopolitics, the global battery/EV supply chain looks quite different from that of conventional fossil-burning cars.

Since 2015, China has been executing its Made in China 2025 industrial strategy. Consequently, it is currently the world’s leading battery/EV market in terms of both volume and sophistication, it has the lowest EV manufacturing costs (going beyond just labor costs), and it has the fastest learning-by-doing (in a domain that is yet to discover its best practices and dominant designs).

The EU has been pro-active in meeting the Chinese challenge. Its collaborative platform, Battery Alliance, was launched in 2017. Battery-related Important Projects of Common European Interest (IPCEI) are currently under development. The EU’s new strategy is due at the end of 2019.

Cobalt is the most critical raw material in the battery/EV supply chain. The Democratic Republic of the Congo accounts for 70% of the current global supply, whereas Finland accounts for 2% and is the only provider within the EU. Furthermore, Terrafame has the largest cobalt reserves globally and Freeport Cobalt in Kokkola represents 10% of cobalt’s global refining capacity. Finland also has certain strengths in the battery/EV supply chain beyond cobalt (in raw materials, e.g., in nickel; in other parts of the supply chain, e.g., in recycling), but realizing them requires both determined political actions and investments.

A full copy of the report can be downloaded here.