Tesla supplier Panasonic to make big battery bet in Europe

Tesla

Japanese group plans to set up its first plant in Norway with Equinor and Norsk Hydro

Panasonic is making a significant push into Europe with plans to set up its first battery factory in Norway, as the Japanese group tries to leverage its success supplying Tesla in the US to win more business from European carmakers.

The group intends to team up with Norwegian state-controlled oil and gas major Equinor and aluminium company Norsk Hydro for a feasibility study on expanding its battery business in Europe to be completed within six months.

Despite running the world’s largest battery factory with Tesla in Nevada, Panasonic has only a small presence in Europe, where a number of companies including Swedish upstart Northvolt and Tesla itself are building plants.

Demand for batteries is set to increase rapidly as electric car sales take off, with their share of the European market forecast to climb to 15 per cent next year, according to policy group Transport & Environment.

“Europe is quite a premature market. It is still growing and there’s a lot to happen. It could be colossal,” Allan Swan, the head of Panasonic’s US battery manufacturing unit, told the Financial Times.

European carmakers are likely to lead the switch to electric vehicles by aiming to be the most “progressive” in the industry, he added.

The size of any factory in Norway would depend on the outcome of the study, Mr Swan added, but it could be “in the ballpark” of the Nevada gigafactory, which is about to be upgraded to 38 gigawatt hours a year.

The factory owned by Northvolt, which is backed by Volkswagen, BMW, Ikea and Goldman Sachs, close to the Arctic Circle in Sweden is due to have at least 34GWh of capacity by 2024 and could be upgraded to 40GWh. Peter Carlsson, Northvolt’s chief executive, told the FT last year that Europe was expected to have about 600GWh of capacity by 2030.

Panasonic has previously supplied batteries to European carmakers such as Volkswagen and Peugeot, but not the cylindrical lithium-ion type it makes for Tesla.

Its expansion into Europe, where the group generates about $7bn in revenue, also comes as Tesla has recently announced plans to build its own battery cells, making it more critical for Panasonic to expand its client base.

Mr Swan said the Norway plant could be “of interest” to Tesla as well, given carmakers are under pressure to pursue partnerships to secure future supply even if they have plans to produce batteries in-house.

Norway presents several advantages as the Scandinavian country produces nearly all its electricity from renewable hydroelectric power, while its market for electric vehicles is the most developed in the world. In September, almost two-thirds of new car sales were for fully electric vehicles, while just one in 10 cars were petrol-only with the rest hybrids.

Al Cook, head of global strategy and business development at Equinor, said the electric battery partnership demonstrated that the oil and gas group was committed to boosting its renewable energy business, which faces challenges related to intermittency, when, for example, the wind drops.

“It’s a recognition of how more and more governments in Europe are focused on net zero by 2050 or earlier. And we want to be on the right side of history,” he said, adding that three big industrial names would have more credibility than some more “immature” companies.

All three companies said they wanted to have a partnership that went beyond a single factory. “We have to reach the conclusion that this is very scalable. We’re not doing this to build a battery factory together and that’s the end of it,” said Mr Cook.

Arvid Moss, head of energy and corporate development at Hydro, said the companies would study the “whole supply chain” including the possibility to source raw materials such as cobalt and lithium from Europe. Several mining projects for cobalt and lithium are under way in Sweden and Finland, but it is not yet clear how big they will be.

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