The reason for these moves is clear, especially with regard to the initial stages (such as material extraction or processing): to ensure the entire value chain and its deployment now that the industry is still in an incipient state and with some phases of activity "limited" (such as supply itself, due to the potential shortage of raw materials in the coming years).

Thus, through these operations, large companies that want to dominate the market (whether they are battery or vehicle manufacturers - the latter being the major market drivers) seek to ensure their control and competitiveness along the entire value chain and its key stages. This includes not only the "upstream" activities or those prior to cell manufacturing, such as those already mentioned, associated with obtaining raw materials and their treatment (which, in the short term, are perhaps the highest priority in order to guarantee the development of the industry).

Likewise, the interest of these companies is also focusing on ensuring key activities for the future of the industry in the medium term, such as the second life of devices or their recycling. All this, with the aim of ensuring a complete "circularity" in the long term that will provide a real competitive advantage in order to dominate one of the major industries of the future.

SECURING SUPPLY, THE TOP PRIORITY IN THE SHORT TERM

In this context, the major announcements that are taking place in recent months are mostly focused on the development of large agreements and investments associated with the extraction of raw materials and their processing. As we already saw in our analyses in social media, it is expected that by 2030 there will be a notable shortage in critical materials for the industry (such as lithium, cobalt, nickel or copper).

For example, in the case of lithium alone, demand growth is expected by 2030 to ≈1.85 Mt (including both its use for batteries and other applications). In contrast, taking into account ongoing projects and current capacities, production (and thus supply) will "only" increase to ≈1.4 Mt.

This explains the "race" that is taking place to ensure the supply and control over these resources, which are essential to establish a truly competitive and profitable activity around batteries.

In this regard, it is the large automotive OEMs that are making the most ambitious moves. Above all, those that have internalized or secured the supply of cells through their own activities or agreements with specialized manufacturers. Their aim with these operations is to integrate the value chain even further upstream and secure the supply flow from the start.

A clear example of this is the US giant GM, which recently announced its investment of more than 650 million dollars in the world´s third largest lithium mine (located in Nevada, USA). With this agreement (made together with the company Lithium Americas Corp.), the vehicle manufacturer also ensures that it will be the only customer of the mine, with the aim of guaranteeing its supply while reinforcing its competitiveness with respect to other producers.

However, this is just one of many announcements made in recent months by major players in the automotive and battery manufacturing market. Similar to GM, companies such as BMW (which has invested in Argentine mines); CATL (which, together with its partner CMOC, will operate mines in Bolivia); or Tesla (which has already announced its intention to operate the mines it has acquired as property in 2020, also in Nevada) have made moves to integrate extraction activities into their operational scope.

To these operations are added strategic agreements with companies specialized in the sector for the supply of raw materials (such as, for example, Tesla´s own agreement with Piedmont Lithium) in order to complement its own supply capabilities.

However, the integration of raw material extraction is only part of a larger scope that some companies are adopting. A clear case in point is Stellantis, which is betting on a broader strategy that not only includes securing the supply of materials (thanks to its entry into the capital of companies such as Vulcan Energy), but also their processing for subsequent use in batteries. Hence its investments and supply agreements with companies such as Australia´s Element 25 and Finland´s Terrafame, which will ensure the supply of manganese sulfate and nickel sulfate respectively for the coming years. Here again, GM has made progress in different collaboration and joint investment agreements with materials companies such as LG Chem and Livent.

But it is not only the big car manufacturers that are moving in this direction. The main cell producers also stand out, such as SK On (which has reached a joint collaboration agreement to process graphite together with Urbix Inc. for its US gigafactories) or Panasonic (which has secured the manufacture of cathode materials for its plants also located in the USA through Redwood Materials).

THE STRATEGIC VALUE OF DOWNSTREAM INTEGRATIONS

So far, we have outlined some of the major movements that electric vehicle and battery manufacturers are developing upstream in the value chain.  

However, different operations are also taking place within the industry that foresee the strategic and differential value that will have, in the medium term, the integration and development of activities such as the second life of devices or their recycling (taking into account even more the already mentioned potential shortage of supply).

All this taking into account the new regulations that in regions such as Europe are already emerging for the sake of sustainability and circularity of the sector, which gives critical weight to the development of these activities and their integration and flow with the extraction, processing and manufacturing stages.

In fact, it is in the old container where we find some of the great movements in this direction that are taking place in the sector. Above all, led by one of the leading companies in the region, such as Northvolt, which since 2022 has its own battery recycling program and plant, which it expects to expand in the coming years.

It is not the only battery manufacturer that has carried out this type of integration. For example, another benchmark, CATL, has launched and invested more than $3.5 billion to boost the activity of its subsidiary Brunp, which specializes in recycling activities. SK Innovation has also started to work and invest in developing its own recycling capabilities, as have other manufacturers such as Envision AESC or Panasonic (who have partnered with Redwood Materials).

It is worth noting that, in this case, it is not only producers of electric cells or electric vehicles that are taking these steps towards developing their own recycling activities. Due to their synergies, companies specializing in the processing of battery materials are also expanding their scope of action. Companies such as Solvay, Umicore, Saft and Posco have already begun to integrate these capabilities into their operations and business.

Although the major downstream operations in this case have focused on the recycling phases (mainly due to the expected regulations and as a counterweight to the potential shortage of raw materials), there are also initiatives led by car manufacturers aimed at giving a second use to the batteries used in their fleets.

This is the case of OEMs such as Mercedes (through its subsidiary Mercedes Benz Energy); Renault (which is planning different projects in France and the United Kingdom); Audi (which is collaborating with its partner Nunam to give a second life to its batteries in small mobility); or Nissan (which is working with the Italian energy company Enel to give a second life to its devices for network systems). These are just a few examples of the first steps being taken by the main manufacturers to promote this activity.

In short, we can see how the capacity for expansion of the battery industry and its players is increasing both upwards and downwards. It can be seen how, beyond technological development, there is also a competition for positions in all the key activities of the chain. Above all, with the aim of establishing and positioning themselves with all possible competitive advantages in an industry with a bright future. As a result, there is an increasing proliferation, within the sector, of cross-cutting approaches to activity and offerings that take into account a 360º vision of the industry.

If you want to know how we can help you take your first steps or strengthen your activity in any of the key phases of the battery value chain, we invite you to visit the CIC energiGUNE website and to follow us on social media so that you can keep abreast of the latest developments in the sector and possible new integrations.