Since Tesla made the name popular in 2014 through its first macro battery factory project, the term gigafactory has been gaining attention on the industrial and economic agenda of major developed countries around the world.

Not surprisingly, the expected growth of the energy storage industry (especially electric mobility) in the coming years is forcing countries to take positions in the entire value chain of this industrial sector, including factories that produce battery cells. Above all, taking into account the economic expectations around the electromobility sector, leading both the EU itself and its countries to consider this industry as a key trigger to initiate the post-covid recovery and achieve the energy transition and sustainability objectives set in the EU territory.

In 2017 European Commissioner Maroš Šefčovič, known as the "battery commissioner", made a firm commitment to batteries as critical to the competitiveness of the continent´s future; considering that Europe was never going to produce the cheapest batteries but can produce the best, the most efficient and the most sustainable batteries.

In this context, in 2017, Northvolt was launched; an initiative led by two former Tesla executives supported by the Swedish Energy Agency and the European Investment Bank and which aspires to become a flagship of high-quality green batteries.

Currently, Northvolt has already committed contracts for €27 billion and has raised more than €17.3 billion funding with investors as relevant as Volkswagen or Goldman Sachs to launch an estimated production of 150Gwh in 2030.

Along with Northvolt, one of the most popular projects in Europe in recent years has been the one planned by Tesla in Germany. The company, led by media icon Elon Musk expects to open its first European gigafactory in the summer of 2021, hoping to reach a capacity of up to 40 GWh in the medium term. Such are the prospects of the American company in Europe that it has already announced plans to start developing a second project on the continent.

But Northvolt and Tesla are just the beginning. Plans have already been announced in Europe to develop more than 20 battery cell factory projects in the coming years. With all of them, an annual production capacity of 600 GWh is expected, which is only 50% of the expected base demand for 2040 in the European market.

Source: The 2040 outlook for EV battery manufacturing (McKinsey)


Leading the way are countries such as Germany, Sweden, Norway, Hungary and Poland, which have taken the initiative to launch and develop these first projects, thanks to the projects that other leading companies such as CATL, Northvolt, SK Innovation or LG Chem have announced in these countries.

Besides, large OEMs such as Volkswagen have recently announced their plans to open up to 6 gigafactories in the coming years in Europe.

Source: CIC energiGUNE


European funding, key to boosting these projects

The prospects of the market potential and the need for many countries to take positions in this race to strengthen the automotive market means that in the coming months new announcements and projects are expected from different agents, especially driven by the potential funding that these projects could receive from the recovery plan that the European Parliament approved in February 2021.

This plan - the largest stimulus package ever financed by an EU entity - aims to finance strategic projects for countries, which will not only enable them to tackle economic recovery but also accelerate the achievement of other EU objectives such as climate and digital transition; something that strengthens, even more, the interest in developing projects such as a gigafactory.

In fact, many of the projects announced in recent months have already announced their intention to apply for these funds in collaboration with the different national governments, intending to accelerate their launch and development process. Some of these executives have already informed the European Union of their specific plans to develop and invest in gigafactories located in their territories.

Beyond this possible future funding, some of these initiatives have already begun to work on developing their projects thanks to injections of funding or capital granted by EU institutions, such as the European Investment Bank or EIT Innoenergy. The latter, founded and financed by the European Union itself, is consolidating its position as an essential player in developing these projects, supporting not only plans associated with gigafactories but also the development of other storage technology solutions such as supercapacitors.

Thus, initiatives with 100% European technology such as the French Verkor or ACC, the Norwegian FREYR or the aforementioned Northvolt are already working on their plants and technologies thanks to the involvement and support of these institutions.

As one can see, Europe has made the decision to have a relevant position in the world production of batteries for the automotive market, and the next few years will see an evolution in the European map of gigafactories. In this sense, in recent times, there have been some proposals for initiatives in the Iberian Peninsula that seek to join this train that is underway in Europe and that will be reviewed soon in a new post.



Sara Ortiz, Economic-Financial and Strategy Director of CIC energiGUNE




In collaboration with:

Iñigo Careaga: BCARE Business Analyst

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