WVW Worx

Main Menu

  • Volkswagen News
  • Volkswagen Emissions
  • Volkswagen credit
  • Volkswagen Electric
  • Banking

WVW Worx

Header Banner

WVW Worx

  • Volkswagen News
  • Volkswagen Emissions
  • Volkswagen credit
  • Volkswagen Electric
  • Banking
Volkswagen Emissions
Home›Volkswagen Emissions›Europe is expanding supply chains for electric vehicles

Europe is expanding supply chains for electric vehicles

By Raymond J. Nowicki
March 22, 2022
0
0

Electric vehicle production in Europe is expected to reach 31% of global production by 2030. Source: AFP

By 2030, Europe is expected to overtake China to become the world’s leading region for electric vehicle (EV) production, creating both new opportunities and challenges for industrial transformation.

According to the McKinsey & Company report, the continent is pushing ahead with its vehicle electrification, fueled in part by the Volkswagen (VW) diesel emissions test cheating scandal and the COVID-19 pandemic.

While China accounts for half of global electric vehicle sales, Europe will overtake China to become the region with the world’s largest production capacity for electric vehicles by 2030. Unit prices of electric vehicles and fossil fuel cars will be similar by 2025, figures from GlobalData show.

Global EV Sales by Region (2021)

Source: Canalys; compiled by DIGITIMES, March 2022

In 2020, 1.4 million electric vehicles were sold in Europe, more than 1.2 million in China. In 2021, China sold 3.2 million electric vehicles – 15% of new cars sold there, while Europe sold 2.3 million electric vehicles – 19% of new cars sold there, data from the International Energy Agency and Canalys showed.

The figures show that Europe has the highest EV penetration rate. Many automakers and battery developers are crowding into the continent, which is catching up with China in building electric vehicle supply chains.

Political incentives that boost sales

More European consumers are switching to EVs as tighter tailpipe emissions regulations apply and many governments have lowered EV prices by introducing tax exemptions and other incentives to encourage EVs. According to 6W Research, the European EV market will grow at a CAGR of 29.1% from 2021 to 2027.

Europe’s EV production accounted for 20.5% of total global production in 2021, which will rise to 31% by 2030. By then, the Greater China region will produce 14.9 million EVs, followed by Europe with 11.6 million units and North America with 5.8 million units, IHS Markit calculated.

The Renault-Nissan-Mitsubishi alliance pledged in January 2022 to invest €20 billion over five years to develop five EV platforms. Toyota also announced its plan to allocate JPY 4 trillion to electric vehicles over the next five years in late 2021.

Swedish battery developer Northvolt announced in late 2021 that it had produced its first lithium-ion battery at its factory in northern Sweden. “The cell marks a new chapter in European industrial history and is the first to be fully designed, developed and assembled in a Giga factory by a domestic European battery company,” it said.

In 2021, VW outlined its plan to invest $100 billion in new automotive technologies, including electrification, digitalization, robotic production and mobility services, as part of its $180 billion budget by 2026. The German automaker is set to become the world’s largest EV supplier, producing about 5.4 million electric vehicles, compared to about 427,000 cars in 2021, IHS Markit said.

Mercedes-Benz produced around 113,000 electric vehicles in 2021 and is expected to reach 2.1 million by 2030. By then, half of the group’s electric vehicle production will remain in Europe, 35% in its bases in China and less than 8% in North America.

Toyota has raised its EV sales target from 2 million to 3.5 million units per year by 2030 and plans to allocate at least $35 billion to EVs by 2026. About 28.6% of its electric vehicle production is in Japan, 27.5% in China, 21% in Europe and 10.6% in North America.

Europe’s BEV production in 2030

production site

automaker

United Kingdom

Jaguar, Land Rover, VW, BMW

Sweden

Volvo

Slovakia

VW, Stellantis, Land Rover

Belgium

Volvo, Volkswagen

Germany

Tesla, VW, BMW, Benz, Ford, Stellantis

Austria

fisherman

Czech Republic

Hyundai, Mazda, VW, Toyota

Hungary

Suzuki, Benz, BMW

Poland

Stellantis

France

Stellantis, Toyota

Spain

Stellantis

Slovenia

Nissan

Italy

Stellantis

Romania

ford

Source: IHS Markit; compiled by DIGITIMES, March 2022

Established more super battery factories in Europe

European companies are vying with their Asian competitors for supremacy in EV battery production.

VW plans to build six factories to manufacture batteries and components for electric vehicles by 2030 – all in Europe. The first two are planned in Skelleftea, Sweden, and Salzgitter, Germany, and will each produce a capacity of 40 GWh and power 300,000 vehicles per year.

In 2021, Nissan and Envision AESC announced a £1 billion initiative to build a battery factory in Sunderland, England.

McKinsey estimates that by 2040 Europe will be home to 80 super battery factories to meet its annual battery needs of 1.2 TWh. As of July 2021, Europe has announced construction plans for about 40 planned factories. The continent has attracted established battery manufacturers like LG Energy Solution (LGES) and SK On, as well as fast-growing battery startups like Northvolt.

New battery supply chains in Europe

Although there are not many battery supply chains in Europe, they could grow rapidly in the next 5-10 years as new plans mushroom.

Almost all auto OEM companies have engine plants near their plants, which will also be important for the battery industry. LGES has launched a €1.5 billion plan to expand its lithium-ion battery factory in Poland in 2021. From the last quarter of this year, the Wroclaw plant will produce up to 65 GWh of batteries, compared to 35 GWh now.

The largest EV battery maker, China’s CATL, is a supplier to Europe’s top automakers – VW, Benz and BMW. Since 2014, CATL has been working with the German government to develop battery technology. Some analysts said VW is likely to work with CATL to build six super battery factories in Europe by 2030.

Battery production and assembly are the two segments that have paid for themselves. Northvolt has won more than $27 billion in orders with BMW, Fluence, Scania, VW, Volvo and Polestars.

In late 2021, Northvolt and Portuguese energy company Galp formed a joint venture company, Aurora, and planned to build a lithium conversion plant in Portugal. They aim to make the facility the largest of its kind in Europe, with an initial goal of supplying up to 35,000 tonnes of battery-grade lithium hydroxide each year.

Another startup, Britishvolt, said in early 2022 it had agreed to supply batteries to Lotus, which is developing electric racing cars.

Nonetheless, Europe still needs more investment to support EV charging infrastructure and new component supply chains. More foreign direct investment will flow into supply chains, not just at the OEM level, some suppliers said.

challenges threaten

Europe’s steady transition to electric vehicles also signals that the automotive industry is facing unprecedented changes.

The European car industry provides 14.6 million workers with direct and indirect jobs – about 6.7% of total employment in the EU, figures from the Association of European Car Manufacturers (ACEA) show.

Major car manufacturers such as the VW Group (owner brands VW, Audi, Porsche, Skoda and Seat), Stellantis (Fiat, Peugeot, Citroen, Opel/Vauxhall) and the Renault Group, BMW and Benz are based in Europe. The continent accounts for a quarter of passenger sedans and 19% of commercial vehicles produced worldwide.

Smaller sized companies must rely on revenue from manufacturing vehicle components for internal combustion engines, but components such as spark plugs, fuel injectors, tailpipes, transmissions and fuel tanks are no longer required by electric vehicles. Manufacturing alternative products will be difficult for traditional manufacturers.

Related posts:

  1. Bank of England targets greener corporate bond portfolio
  2. New Ford company to build 2 electric vehicle battery factories
  3. Lamborghini splurges $ 2.4 billion to electrify its supercars
  4. These car nameplates may be abandoned

Recent Posts

  • Volkswagen creates enthusiasm – The Irish News
  • A look back at the 1981 Volkswagen Passat
  • Volkswagen has already sold out electric cars in key markets this year
  • Volkswagen Group CEO: Transition to electric vehicles cannot yet be accelerated
  • 9 Stunningly Beautiful Cars Collectors Don’t Want

Archives

  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • March 2021

Categories

  • Banking
  • Volkswagen credit
  • Volkswagen Electric
  • Volkswagen Emissions
  • Volkswagen News
  • Terms and Conditions
  • Privacy Policy