Tag: europe

Sam Adham (SA), Head of Battery Materials, Economics, and Sustainability at CRU Group, speaks with Jeremy Weltman (JW) about Beijing’s Contemporary Amperex Technology Ltd (CATL) sending more than 2,000 workers to Spain to build a €4bn plant with Stellantis, and what it means for Europe’s EV ambitions.

SA: Battery manufacturing is an incredibly precise and complex process and Chinese companies want to avoid the leakage of technical know-how. CATL is transplanting its equipment and workers so that it can ramp up the factory quickly – where otherwise training and relying on a majority-local workforce would be too risky. Over time the idea is to phase out those workers and implement heavy automation.

The industry also needs joint ventures, as in the case of Stellantis and CATL. Both parties want partnerships to share the costs and risks.

There are some parallels with what happened in the auto industry in China years ago. Back then, the authorities in Beijing made it a rule that any Western car company wanting to set up in China had to form a joint venture with a local partner. The Chinese learnt from them, and slowly over time, they showed them the door. Now, Western car companies are on the decline in China. Europe and the West generally seem to think they can do the same thing in reverse, but with batteries, be open to Chinese entry and somehow benefit from it. But it’s unlikely to happen in the same way.

SA: Exactly. The idea is: come in, invest, we’ll even help you with local government funding, as long as you use local labour, pay taxes here, and share your technology over time.

But the CATL plant in Spain shows that isn’t happening. CATL is bringing almost all of the plant’s operational workforce from China. From the Chinese manufacturing perspective, it has to be that way – certainly initially. If you start changing process flows or factory parameters and operating procedures, you risk lower quality and higher defect rates. You end up needing to build more batteries just to make up for the losses.

So CATL’s approach is to transplant a Chinese factory into Spain – same people, same equipment, same methods. That’s the only way they can guarantee quality and efficiency.

SA: The Koreans faced the same challenge early on. LG’s plant in Poland, which supplies Volkswagen and other European carmakers, went through this too. They didn’t share their technology with the local workforce either, for the same reason: maintaining process integrity.

Eventually, local operations get better integrated, but that takes time. Europe, for now, seems to have accepted that this is how it’s going to be. It’s not ideal, the technology isn’t being shared, but the joint venture partners like Stellantis or Volkswagen will still learn something, and they get a say in the technology direction for the joint venture.

SA: To understand that, you have to look at what goes into a battery, the raw materials and the chemistry. There are two main lithium-ion chemistries: NMC, which uses nickel, manganese, and cobalt for longer range but higher cost; and LFP, lithium iron phosphate, which is cheaper, more stable, and lasts longer, though traditionally with lower range.

For years, the industry focus was on raw materials and economies of scale, expanding the gigafactory model. But now, raw materials are relatively cheap compared to where they were. The real cost differences come from technology, cell design, additives, high-performance materials.

That’s why everyone wants to use LFP: it’s cheaper and easier to scale efficiently. It’s all about yield and vertical integration, being able to control every step from raw materials to finished cells.

SA: Absolutely. For example if you’re buying lithium at market prices, you’re already at a disadvantage compared to a competitor that owns its own mine. That’s why Chinese firms have such an advantage, they’ve built vertically integrated supply chains.

The rest of the world is still starting from a higher cost base. Labour and energy costs in Europe are higher, and every new gigafactory faces a ramp-up period of two or three years before efficiencies improve sufficiently. That’s why no one outside China is yet producing batteries as cheaply. It’ll happen eventually, but not soon.

SA: Very much so. Look at BYD, for example. They’ve made major improvements in both technology and performance. They increased battery cell size to gain more energy per unit of space and eliminated modules and packs altogether, removing non-energy-carrying components. Other manufacturers are now following that approach.

Most of the innovation nowadays is chemical, not mechanical. It’s really electrochemistry that’s driving efficiency. Even in China, the focus now is shifting from longer range to faster charging, and new advanced materials are enabling that. If you can recharge in 5–10 minutes and go another 250 miles, you don’t need a massive battery. That’s the new race.

SA: Not really. Whenever you hear about looming raw material shortages or long-term deficits, that’s mostly mining companies trying to talk up the price and attract investors. These materials are speciality chemicals, but they’re also commodities, and they go through cycles, but as markets mature, volatility falls.

The more important thing is planning for the long term, knowing what supply levels will be needed, and that drives long-term investment in raw materials. Supply isn’t the constraint on EV growth anymore. Government policy is.

SA: It’s very hard. China dominates every stage: from mining through refining, cathode and anode materials, cell manufacturing, EV assembly, and even recycling.

And especially so in the ‘midstream’. Take manganese: it’s found in a well-diversified and low-risk group of countries, but 95% of the battery-grade manganese processing happens in China.

It’s not just about access to materials, it’s the know-how. China is officially restricting the sharing of high-end technologies – like the latest generation LFP cathode materials used for super-fast-charging EVs – and the equipment to make them.

The West is trying to decentralise that, but with limited success. If anything, China’s market share is still growing at each step, and Chinese companies will keep building overseas plants where necessary.

Sam Adham will take the stage at the GlobalData Automotive Europe 2025 Conference (15–16 October) to share his insights in a session titled, “How the Battery Supply Chain and Technology are Powering Growth in the EV Market.”

“The battery balancing act: Europe’s costly catch-up with China” was originally created and published by Motor Finance Online, a GlobalData owned brand.

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