Source 2
16th February 2021 (updated May 4, 2021),
by Jack Ewing and Ivan Penn
The Auto Industry Bets Its Future on Batteries
Carmakers, government agencies and investors are pouring money into battery research in a
global race to profit from emission-free electric cars.
[1] As automakers like General Motors,
Volkswagen and Ford Motor make bold
promises about transitioning to an electri-
fied, emission-free future, one thing is be-
coming obvious: They will need a lot of
batteries.
[2] Demand for this indispensable com-
ponent already outstrips supply, promot-
ing a global gold rush that has investors,
The lab at QuantumScape, a Silicon Valley start-up
established companies and start-ups rac-
whose investors include Volkswagen and Bill Gates,
ing to develop the technology and build is working on a technology that could make
the factories needed to churn out millions batteries cheaper, more reliable and quicker to
of electric cars. recharge. Picture: Gabriela Hasbun for The New
[3] Long considered one of the least interesting car components, batteries may now be one of
the most exciting parts of the auto industry. Car manufacturing hasn’t fundamentally changed
in 50 years and is barely profitable, but the battery industry is still ripe for innovation. Tech-
nology is evolving at a pace that is reminiscent of the early days of personal computers, mo-
bile phones or even automobiles, and an influx of capital has the potential to mint the next
Steve Jobs or Henry Ford.
[4] Wood Mackenzie, an energy research and consulting firm, estimates that electric vehicles
will make up 18 percent of new car sales by 2030. That would increase the demand for bat-
teries by about eight times as much as factories can currently produce. And that is a con-
servative estimate. Some analysts expect electric vehicle sales to grow much faster.
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[5] Carmakers are engaged in an intense race to acquire the chemical recipe that will deliver
the most energy at the lowest price and in the smallest package. G.M.’s announcement last
month that it would go all electric by 2035 was widely considered a landmark moment by pol-
icymakers and environmentalists. But to many people in the battery industry, the company
was stating the obvious.
[6] “This was the last in a wave of big announcements that very clearly signaled that electric
vehicles are here,” said Venkat Viswanathan, an associate professor at Carnegie Mellon
University who researches battery technology.
[7] Battery manufacturing is dominated by companies like Tesla, Panasonic, LG Chem, BYD
China and SK Innovation — nearly all of them based in China, Japan or South Korea. But
many new players are getting into the game, and investors, sensing the vast profits at stake,
are hurling money at start-ups that they believe are close to breakthroughs. “I think we’re in
the infancy stage,” said Andy Palmer, the former chief executive of Aston Martin and now the
nonexecutive vice chairman of InoBat Auto, a battery start-up. “There is more money than
there are ideas.”
[8] QuantumScape, a Silicon Valley start-up whose investors include Volkswagen and Bill
Gates, is working on a technology that could make batteries cheaper, more reliable and quicker
to recharge. But it has no substantial sales, and it could fail to produce and sell batteries. Yet
stock market investors consider the company to be more valuable than the French carmaker
Renault.
[9] China and the European Union are injecting government funds into battery technology.
China sees batteries as crucial to its ambition to dominate the electric vehicle industry. In re-
sponse, the Chinese government helped Contemporary Amperex Technology, which is partly
state-owned, become one of the world’s biggest battery suppliers seemingly overnight.
[10] The European Union is subsidizing battery production to avoid becoming dependent on
Asian suppliers and to preserve auto industry jobs. Last month, the European Commission,
the bloc’s administrative arm, announced a 2.9 billion-euro, or $3.5 billion, fund to support
battery manufacturing and research. That was on top of the more than €60 billion that Euro-
pean governments and automakers had already committed to electric vehicles and batteries,
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according to the consulting firm Accenture. Some of the government money will go to Tesla
as a reward for the company’s decision to build a factory near Berlin.1
[11] The United States is also expected to promote the industry in accordance with President
Biden’s focus on climate change and his embrace of electric cars. In a campaign ad last year,
Mr. Biden, who owns a 1967 Chevrolet Corvette, said he was looking forward to driving an
electric version of the sports car if G.M. decided to make one.
[12] Several battery factories are in the planning or construction phase in the United States,
including a factory G.M. is building in Ohio with LG, but analysts said federal incentives for
electric car and battery production would be crucial to creating a thriving industry in the United
States. So will technological advances by government-funded researchers and domestic
companies like QuantumScape and Tesla, which last fall outlined its plans to lower the cost
and improve the performance of batteries.
[13] “There’s no secret that China strongly promotes manufacturing and new development,”
said Margaret Mann, a group manager in the Center for Integrated Mobility Sciences at the
National Renewable Energy Laboratory, a unit of the U.S. Energy Department. “I am not
pessimistic,” she said of the United States’ ability to gain ground in battery production. “But I
don’t think all of the problems have been solved yet.”
[14] Entrepreneurs working in this area said that these were early days and that U.S. com-
panies could still leapfrog the Asian producers that dominate the industry.
[15] “Today’s batteries are not competitive,” said Jagdeep Singh, chief executive of Quan-
tumScape, which is based in San Jose, Calif. “Batteries have enormous potential and are crit-
ical for a renewable energy economy, but they have to get better.”
[16] For the most part, all of the money pouring into battery technology is good news. It puts
capitalism to work on solving a global problem. But this reordering of the auto industry will also
1
The Berlin Gigafactory supposedly will not only produce electric cars but also battery cells.
3
claim some victims, like the companies that build parts for internal combustion engine cars and
trucks, or automakers and investors that bet on the wrong technology.
[17] “Battery innovations are not overnight,”
said Venkat Srinivasan, director of the Ar-
gonne National Laboratory’s Collaborative
Center for Energy Storage Science. “It can
take you many years. All sorts of things can
happen.”
[18] Most experts are certain that demand for
batteries will empower China, which refines
most of the metals used in batteries and QuantumScape’s solid state lithium metal cell battery
for electric vehicles. Picture: Gabriela Hasbun for The
produces more than 70 percent of all battery New York Times.
cells. And China’s grip on battery production
will slip only marginally during the next decade despite ambitious plans to expand production
in Europe and the United States, according to projections by Roland Berger, a German man-
agement consulting firm.
[19] Battery production has “deep geopolitical ramifications,” said Tom Einar Jensen, the chief
executive of Freyr, which is building a battery factory in northern Norway to take advantage of
the region’s abundant wind and hydropower. “The European auto industry doesn’t want to rely
too much on imports from Asia in general and China in particular,” he added.
[20] Freyr plans to raise $850 million as part of a proposed merger with Alussa Energy Ac-
quisition Corporation, a shell company that sold shares before it had any assets. The deal,
announced in January, would give Freyr a listing on the New York Stock Exchange. The
company plans to make batteries using technology developed by 24M Technologies in Cam-
bridge, Mass.
[21] The first priority for the industry is to make batteries cheaper. Batteries for a midsize
electric car cost about $15,000, or roughly double the price they need to be for electric cars to
achieve mass acceptance, Mr. Srinivasan said.
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[22] Those savings can be achieved by making dozens of small improvements — like pro-
ducing batteries close to car factories to avoid shipping costs — and by reducing waste, ac-
cording to Roland Berger. About 10 percent of the materials that go into making a battery are
wasted because of inefficient production methods.
[23] But, in a recent study, Roland Berger also warned that growing demand could push up
prices for raw materials like lithium, cobalt and nickel and cancel out some of those efficiency
gains. The auto industry is competing for batteries with electric utilities and other energy
companies that need them to store intermittent wind and solar power, further driving up de-
mand.
“We are getting rumbles there may be a supply crunch this year,” said Jason Burwen, interim
chief executive for the United States Energy Storage Association.
[24] An entire genre of companies has sprung up to replace expensive minerals used in bat-
teries with materials that are cheaper and more common. OneD Material, based in San Jose,
makes a substance that looks like used coffee grounds for use in anodes, the electrode
through which power leaves batteries when a vehicle is underway. The material is made from
silicon, which is abundant and inexpensive, to reduce the need for graphite, which is scarcer
and more expensive.
[25] Longer term, the industry holy grail is solid state batteries, which will replace the liquid
lithium solution at the core of most batteries with solid layers of a lithium compound. Solid state
batteries would be more stable and less prone to overheating, allowing faster charging. They
would also weigh less.
[26] Toyota Motor and other companies have invested heavily in the technology, and have
already succeeded in building some solid state batteries. The hard part is mass producing
them at a reasonable cost. Much of the excitement around QuantumScape stems from the
company’s assertion that it has found a material that solves one of the main impediments to
mass production of solid state batteries, namely their tendency to short circuit if there are any
imperfections.
[27] Still, most people in the industry don’t expect solid state batteries to be widely available
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until around 2030. Mass producing batteries is “the hardest thing in the world,” Elon Musk,
Tesla’s chief executive, said on a recent conference call with analysts. “Prototypes are easy.
Scaling production is very hard.”
[28] One thing is certain: It’s a great time to have a degree in electrochemistry. Those who
understand the properties of lithium, nickel, cobalt and other materials are to batteries what
software coders are to computers. Jakub Reiter, for example, has been fascinated with battery
chemistry since he was a teenager in the 1990s in Prague, long before that seemed like a hot
career choice.
[29] Mr. Reiter was doing graduate research in Germany in 2011 when a headhunter recruited
him to work at BMW, which wanted to understand the underlying science of batteries. Last
year, InoBat poached him to help set up a factory in Slovakia, where Volkswagen, Kia,
Peugeot and Jaguar Land Rover produce cars.
[30] Mr. Reiter is now head of science at InoBat, whose technology allows customers to quickly
develop batteries for different uses, like a low-cost battery for a commuter car or a high- per-
formance version for a roadster.
[31] “Twenty years ago, nobody cared much about batteries,” Mr. Reiter said. Now, he said,
there is intense competition, and “it’s a big fight.”
Reading questions:
1. Which positive impact may Tesla’s factory have for Germany and the European Union?
Consider political, social, and economic aspects.
2. What may be the reason for Tesla to produce batteries near its car factory?
Ewing, J. & Penn, I. (2021, 16. February). The Auto Industry Bets Its Future on Batteries. The
New York Times. https://www.nytimes.com/2021/02/16/business/energy-environment/electric-
car-batteries-investment.html.
