A reflection on the evolving battery industry

From Knightec‘s vantage point, the initial rounds have seen significant casualties. Britishvolt, once aspiring to be a European leader, was out of the competition early on, failing to reach production before its collapse. Similarly, Polarium faced a significant devaluation, though it remains in the fray with promises of a stronger comeback. The industry also witnessed the downsizing of Freyr Battery’s Norwegian factory, alongside the exit of smaller players like Nilar and Alelion, all before they could make a mark in production.

Despite these setbacks, we do not view these events as indicative of a crisis within the growing battery sector. Instead, they are seen as natural occurrences in a highly competitive and evolving industry. For instance, Northvolt demonstrated resilience by securing significant funding, raising 1.2 billion USD in August and announcing an additional 5 billion USD in January 2024.

Though it must still prove its manufacturing capabilities, Northvolt’s robust order book and investor support suggest a balanced match against market challenges. Likewise, CATL, despite facing lowered profit expectations, remains the giant, highlighting a trend where larger companies tend to navigate the market more successfully than their smaller counterparts.

Entering the battery cell manufacturing industry requires acknowledging the immense stakes, primarily driven by the crucial production cost factor. The push towards electric vehicles (EVs), which fuels the battery industry’s growth, demands economies of scale in manufacturing to reduce ownership costs. This necessity aligns with the industry’s focus, where 95% of considerations revolve around cost efficiency, while the remaining 5% account for qualities like durability, capacity, and power.

Looking ahead to 2024, the landscape appears more challenging as EVs gain traction among the early majority in China and continue to penetrate European markets. The pressure to lower prices further intensifies, exemplified by BYD surpassing Tesla as the market leader in EVs, despite Tesla’s price reductions.

As the industry progresses, we anticipate a consolidation around a few large companies dominating battery manufacturing, much like a boxing ring where heavyweights vie for supremacy. The market’s demanding conditions suggest that only those candidates with substantial resources and strategic foresight—armed with the best trainers and strategies—will thrive. However, this does not reduce the critical roles smaller companies and Academia will continue to play in the transition towards greener energy. Like agile featherweights, these smaller entities must maintain a laser-focused mission without surrendering to diversions, dodging blows, and finding moments to punch above their weight.

On the other hand, Academia is poised to remain a vital cornerman, providing essential talent and research support and ensuring the industry’s champions are well-prepared for the evolving fights of the coming decade.

Knightec’s in-depth analysis highlights the ever-evolving, competitive landscape of the battery manufacturing sector, underlining the critical roles of resilience, strategic foresight, and innovation in overcoming future challenges. We invite you to engage in a comprehensive dialogue with Kristofer Fredin, Ph.D to explore the synergy between your requirements and our innovative solutions. For further details and to arrange a conversation, please visit our website.

Special thanks are extended to Kristofer Fredin, Ph.D, an Advisor at Knightec, for his invaluable insights on the topic. His expertise has been crucial in enhancing the understanding and discussion around it. With a keen interest in energy, mainly focusing on batteries, Kristofer works as an advisor within renewable distribution at Knightec.