Peter Carlsson left Tesla in 2015 to spend more time with his family. But ideas and proposals kept coming in from investors and former colleagues. All his previous experiences pointed in the same direction – to build a large battery factory in Europe. Two years later he started Northvolt and in less than four years, Northvolt has gone from a pre-study to a finished product. This book tells the story of how Northvolt raised SEK 40 billion (€ 4bn) in order to take a leading position in battery manufacturing. It also tells the story of a changing industry.
HOW TO RAISE CAPITAL. Northvolt’s success in attracting capital was attributed to: (1) a clear idea on how the batteries would be produced and why Northvolt was more than just a competitor to Asian manufacturers, (2) each investor got more out of the partnership than a profitable investment – to understand what the companies wanted, Northvolt found a key person in each company early on, (3) delivered on all the points they said they would be able to and (4) attracted talented coworkers.
THE DIESEL SCANDAL PAVED THE WAY. The diesel scandal in 2015 has accelerated the development of electric cars and plug-in hybrids. Volkswagen, for example, will invest €30bn on a completely new model program (corresponding to the total profit for the years 2015–2018). The investment includes not only electric cars but also battery production and new car factories where electric cars will be built without giving any climate footprint. By 2030, the new electric cars will account for at least 40% of the Group’s total sales (ca 5 million electric cars sold each year).
BIG TREND SHIFT. The International Energy Agency estimates that by 2030 there will be over 125 million electric cars on the roads. In 2019, the same figure was just over 7 million. Including light trucks, lorries and various types of plug-in hybrids, the IEA predicts almost 250 million rechargeable vehicles by 2030. The main reason for the battery revolution is that the cost of manufacturing high-energy lithium-ion batteries has dropped dramatically. Bloomberg has calculated that the reduction in cost per GWh of battery packs produced was ca 85% during the period 2010–2018.
THE HISTORY OF THE LITHIUM-ION BATTERY. Akira Yoshino began his research in the early 1980s with the goal of creating a battery for portable VCRs that could be produced at a reasonable cost in a safe way. In 1991, A&T and Sony were able to present the first products with the new battery used lithium-ion battery in products such as mobile phones, electric cars, portable batteries and electronics products. There are several types of lithium-ion batteries but what they have in common is that they consist of an anode and a cathode (two poles on the battery), an electrolyte and a material that separates the anode from the cathode. Lithium jobs move between the two poles, they swim in the electrolyte. When the battery is charged, the ions move from the cathode side to the anode side. The ions move in one direction when the battery is charging and in the other direction when the battery is used.
THE BATTERY – MATERIALS. The anode in today’s lithium-ion batteries is produced from graphite (a mineral that consists of pure carbon). The biggest difference between lithium-ion batteries is how the second powder mixture and the foil, the cathode, are built up and what the powder mixture consists of. Right now, the NCM batteries are dominant. The cathode then consists of lithium, nickel, cobalt and manganese. It is also these raw materials that account for the vast majority of the cost of building a lithium-ion battery. The cathode is the most important in a lithium battery.
THE BATTERY – CHARACTERISTICS. It is believed that the basic structure of the battery will be the same until at least 2030. Of the entire cost of a lithium-ion battery, the material accounts for 70-75%. Different battery manufacturers thus have 25-30% of the value of the battery that they can influence. If you are 10% more efficient than your competitor, it means that you are only 2% cheaper. One way to try to increase the difference is to control more of the cost structure.
NEED FOR BATTERIES. According to Bloomberg News, the total capacity from battery factories in Europe will be close to 200 GWh by 2023. Thus, the EU would have surpassed the United States in the number of GWh. But both Europe and the US are still far behind China, which in 2023 is expected to reach a capacity of 800 GWh. According to Bloomberg, the value of the market for lithium-ion batteries is estimated at €95 billion in 2030. The need for energy storage in batteries will be at least 4,500 GWh in 20 years, which mean a quadrupling of the need during the years 2023 to 2040.
NEED A CLEAN ECOSYSTEM. All the 100s of new battery factories to be built around the world over the next ten years will need electricity. Coal-fired power plants and nuclear power plants with high efficiency will be a prerequisite to be able to build batteries for the cars that will reduce emissions of carbon dioxide and dangerous nitrogen oxides. Building battery factories in areas with a lot of hydropower and wind power (such as Northvolt – northern Sweden) is a way to reduce dependence on nuclear and coal power. Even if the electric cars do not emit carbon dioxide, the energy consumption itself will affect the climate.
POLITICAL WILL. Older petrol and diesel cars will be forced out of the big cities in the next 5-10 years. The EU has decided on penalties for car companies that do not meet the limit of an average of 95 grams of carbon dioxide per kilometer. From 2019, the fee is close to 100 SEK per gram the manufacturer is above the limit (must be paid per sold and registered car). If, for example, Volvo sells 800k cars but misses the carbon dioxide limit by 1 gram, the fine will be SEK 80 million (ca €8m). This means that some manufacturers want to buy “emission rights” from low-emission manufacturers. The Fiat / Chrysler group is expected to buy emission rights from Tesla for the equivalent of SEK 20 billion (€2bn) for the years 2020 to 2023.
CHINA – LEADER IN EV’S. China is the world’s largest car market and sells the most electric cars in the world. In addition, China dominates the entire value chain, from mines to finished battery packs through ownership interests in several of the world’s largest mining companies, refineries and smelters in all important mining areas and for all the necessary metals. Chinese companies also own the production of the metal alloys required for battery production. Several of the world’s largest manufacturers of batteries for electric cars are Chinese. China is the major power for battery production and over the next ten years the country is expected to have 65% of capacity. Today, the country controls 51% of the capacity to produce lithium, 80% of cobalt production, 33% of nickel production and all production of graphite for batteries for electric cars.