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The European battery sector should not compete for the electronic vehicles market against China. Instead, it should focus on growth areas such as energy storage systems (ESS), according to Ken Hoffman, chief executive officer of battery industry adviser Traubenbach Associates, said on Wednesday September 16. “If you’re an [original equipment manufacturer], go to China and partner with them,” he said in his keynote speech to the European Battery Raw Materials conference in Lisbon, Portugal, being held September 16-18.
Europe has struggled to compete with China in terms of scale and cost in the electric vehicles battery sector while the market has developed.
“Europe should be niche and not try to build gigantic factories. It should not go after the automotive sector because it is not going to [have success],” he said. “There has been an abject failure to build a battery value chain in the West.”
Instead, Europe should look to growth areas in the future. It should develop its ESS sector. This growth in the market is being led by the rapid expansion in data centers. This is driven in turn by the accelerating take-up of AI technology.
“ESS is leading the way in a surge in battery demand in China, which has been led by the use of LFP [lithium, iron, phosphate] batteries,” he said.
The need for improved energy storage was emphasised this April when the Iberian peninsula was subject to a widespread power cut. It was blamed on grid failures, he said.
And the pressure on the system will continue to grow when the demands on it expand, he said.
“The grid is under pressure due to the growth of data centers, which are heavy users of electricity,” he said. “And the need for ESS in the Iberian peninsula will be exacerbated by the growth in AI server farms.”
This issue was growing internationally, with the US already reacting to improve grid stability though the use of storage systems.
“The global grid is being crushed by AI,” Hoffman said. “The need for battery ESS [BESS] is massive – every power-dependent activity needs backup power.”
In response, the industry must improve pack capacities, with power densities likely to soar.
“Stationary storage will be the fastest growing sector of energy storage. To compete, cell companies need to reduce their costs while they increase densities,” Hoffmann said.
He expected a shift toward increased use of manganese-rich batteries, using lithium-manganese-iron phosphate chemistries. He also believed these would gain more market share than the currently dominant nickel-manganese-cobalt chemistry in Europe.
The need for increased capacity in the ESS sector does not get the attention it requires, Hoffmann said. This is because the oil companies are not interested in it. They are focused instead on electric vehicles.
Other battery areas in which the West should develop, he said, would be to meet the growth in demand for drones and robotics. And when targeting growth, Hoffman advised starting relatively small and growing incrementally.
“While Europe has tried what China has done,” he said, “that cannot be achieved because it is too complex to build everything at the same time.”
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