What does the European auto industry need to move to the electro mobility frontier?

Publication Type:

Conference Paper


Gerpisa colloquium, Paris (2017)


Since the 1990s, the European auto industry has been married to diesel, as the most competitive and cost-effective way to reduce greenhouse gas emissions and as a result of EU´s rigorous regulation also free from its long history of noxious local emissions (particles and NOx). The Diesel gate scandal, from September 2015 and still on-going, has revealed all this as myths: European autos in real traffic across emit many times higher local pollutants than the official limits stipulate, either by direct cheating, or by maximum exploitation of legal loopholes in the testing system. Moreover, as the recent reports have demonstrated, fuel efficiency and thus GHG emissions have not declined when measured in cars in real use, in spite of the flattering picture presented by the official test values; and the distance between official and real fuel efficiency has increased drastically (Transport & Emissions 2016: “Mind the gap”. Leading cities around Europe from Madrid and Paris to Munchen, Oslo and Athens have drawn a clear conclusion from this massive failure, and announced plans to prohibit diesel gars within the next 5 – 10 years. The idea of exporting “clean diesel” which was presented as a very promising strategy five years ago, is now dead in the water, and the EU system of emissions regulation has lost its previous international appeal.
An overall strategy change to accelerated electrification of the European vehicle fleet is urgently needed. It is needed to clean up European cities and the noxious emissions which are now killing tens of thousands of people yearly, and it is also needed to safeguard the long-term sustainability and competitiveness of this very important industry sector.
The purpose of this proposal is to investigate which actions are needed at the industry and policy levels to position the European industry at the international electro-mobility frontier.
The challenge is formidable. Currently, the auto industry in Europe is trailing behind because of a lack of corporate and political foresight and investments. There is no European offer matching the advanced electric vehicles launched in the US, neither the premium sedans offered by Tesla, nor the mass market Bolt with its competitive cost and performance combination. And there is no European firms or industry clusters matching the leadership of Japanese and Korean firms and researchers regarding the most critical component in moderns EVs, the lithium-ion battery systems. In 2015, 88 % of the world´s total LIB manufacturing capacity for all end-use applications was located in Japan, Korea and increasingly also in China. These countries also produced a vast majority of the critical battery cell components: cathodes (85% of global capacity), anodes (97 %), separators (84%) and electrolytes (64%). Their manufacturing clusters “are a result of longstanding public and private investments; Japan invested heavily already in the 1990s whereas Korea started to develop its LIB cluster by means of government and industry efforts in the 2000s. China is a relative latecomer, but is now intensively building capacity and capabilities (Chung, D., Elgqvist, E. and Santhanagopalan, S. 2016, Automotive Lithium-Ion Cell Manufacturing: Regional Cost Structures and Supply Chain Considerations. CEMAC, April 2016). Recently the US is making determined efforts to close this gap and build an integrated LIB supply chain locally, with the Tesla Gigafactory, intended for a production capacity of 35 GWh battery annually, as the most public case. If Europe were to electrify all new light vehicles sold annually, 20 such factories would be needed. So far, however, only a few relatively small-scale investments by Japanese and Korean firms have been announced, unfortunately not ideally located when accounting for the high energy intensity of battery production, and the need for fossil free power sources. So what actions, policies and investments would be needed to retool the industry?
Method-wise we combine several approaches. We start with analyzing the wealth of recent reports regarding battery chemistries and cost curves, strategic material supplies and production ramp-up requirements. From this we move on to interviews with experts in industry and academia, discussions with policy-makers regarding available local and national policy options, and conversations with entrepreneurs, such as Peter Carlsson n Sweden (previously at Tesla) engaged in building support for large-scale production of EV components, batteries in particular.
We expect to arrive at scenario-oriented findings which present the key steps in a large-scale industrial transformation and ramp up of new mass production facilities, as well as a tentative discussion of policies needed to support such processes. The study will have profound implications for decision-makers in industrial, political and educational spheres, regarding issues such as physical investments; support schemes and administrative measures; and strategies for competence-build up including the massive supply of engineers with new skill combinations.

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