Could 2025 become the EV industry’s lost year?
Outgoing Quebec innovation minister Pierre Fitzgibbon, who was one of the biggest champions of Canada’s nascent EV sector until his surprise resignation this week, made waves over the weekend by speculating that the $7-billion gigafactory Swedish startup Northvolt is building near Montreal could face a 12 to 18 month delay due to an industry-wide slowdown.
It’s not yet clear whether that will come to pass. Northvolt declined to say whether its Montreal-area plant will be delayed, citing its company-wide strategic review; though schedule changes are possible, it said, nothing has been finalized.
But a lost year in the battery business could mean one less for the world to meet global climate goals like the Paris Agreement, a legally binding treaty signed by Canada that dictates that greenhouse gas emissions must peak before 2025 and decline 43 per cent by 2030 to keep global warming under 1.5 degrees. Transportation accounts for about 20 per cent of those global emissions.
Fitzgibbon’s not alone in his assessment that the industry could lose momentum. Rystad Energy estimates that global battery investments are on track to fall this year for the first time since 2020, after production rose more than 40 per cent in both 2021 and 2022.
“Northvolt was perhaps the one which has been the biggest news story so far…. a lot of hopes and dreams have been placed on them,” said Iola Hughes, head of research at Rho Motion, when the Swedish battery maker’s strategic review was announced in July. “To see them running into troubles, I think, comes as a lot more of a shock.”
To Fitzgibbon’s point, South Korea’s EcoPro reportedly halted its joint battery materials project with Ford last month in Quebec, delaying its launch from 2026 to 2027 so it can redesign the plant to be more in line with Ford’s plans. Umicore, another firm setting up in Ontario, said it foresees an 18-month delay in its battery material business, stalling a $2.76-billion plant it had expected to finish at the end of 2025 with production ramping up in 2026.
Automakers have cited uneven demand as a factor, as inflation and interest rates chip away at car buyers’ interest in upgrading their vehicles.
But there are other considerations for companies to weigh as they try to make up for lost time.
Hughes said some battery upstarts have been struggling to scale their plants from smaller pilots into full-fledged gigafactories. Meanwhile, large-scale Chinese companies have scaled up so quickly that they already make as many batteries as the world wants, all on their own.
Some companies, like Renault’s Ampere and Stellantis– and Mercedes-backed ACC, are responding by switching over their planned plants to make different battery technology, like lithium-iron-phosphate batteries popularized in China.
Alla Kolesnikova, head of data and analytics at Adamas Intelligence, said Western manufacturers also need to “turbocharge” their research and innovation plans to keep pace, prioritizing scientific breakthroughs on features like superfast charging that have come out of China in the last six months.
On the plus side, despite the near-term slowdown, Hughes said long-term projections for the market have not changed.
“I don’t think anyone wants to exit the battery business right now,” said Hughes. “A lot of these players are looking at it like, ‘This is a long-term play,’ rather than immediate gains.”
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