Europe Set to Become Battery Powerhouse as Demand Continues to Rise

Cathode and anode mix in Europe

When looking at the upcoming battery plants in Europe, the question regarding supply of raw materials becomes crucial, and so does understanding the cathode and anode mix plans for these gigafactories.

“Most of these are very major projects and the vast majority of capacity we think will be for building nickel-based battery chemistry, not lithium-iron-phosphate (LFP),” Adham said. “Although we do calculate there will be enough LFP capacity to satisfy demand in Europe.”

According to LMC, adoption of LFP cathodes won’t be massive until at least 2024, but even then, automakers are intending it only for entry level models.

“There’s a general trend towards high nickel/high manganese, and low/no cobalt cathode chemistries,” Adham pointed out. “But legacy chemistries are expected to continue in parallel until the renewal of vehicle lifecycles.”

On the anode side, the main raw material input continues to be graphite, both in its natural and synthetic forms, although the trend in Europe is to replace graphite in the future.

“Even if OEMs wanted to switch into new chemistries or cell suppliers, it's not a simple task that can be done quickly,” Adham said. “You still have to go through the multi-year cell-qualification process and battery and vehicle development cycles, finding a new supplier, etc.”

Based on LMC’s forecast, lithium will be the largest bottleneck, with a supply deficit limiting BEV production.

“In a worst-case scenario, if we assume an equitable share of global lithium carbonate equivalent available to Europe, which is unlikely, then BEV production is still constrained,” Adham said. “There’s only one effective option in our opinion, which is to make significant investments to bring more assets online.”