The battery industry and the electric vehicle value chain

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The battery industry has already become one of the most important actors of the automotive sector. The battery represents on average 40% of the value of an electric vehicle. Its production is for the time being assured by a relative small number of players, mostly located in Asia (90%), and mainly in China (75%). Yet, as electrification is rapidly spreading in all the major global markets, new actors, mainly in Europe and the US, but also in some emerging countries, are entering the sector often with strong support from their respective States. Production is expected to grow tenfold in the next eight-ten years and the struggle amongst all these actors to structure and control the emerging “battery electric vehicle” value chain is going to be fierce.
The last Gerpisa international colloquiums have seen a growing interest on this topic. The launch of a working group on « The battery industry and the electric vehicle value chain » aims at joining our efforts and research in this field and at attracting researchers that have been working outside the scope of our international network on topics such as raw materials and their extraction, the chemistry industry and its transformation, environmental regulations and their impacts on trade and industrial policies, or advanced research on new material and batteries.
This group is open to researchers from different disciplines and non-academic participants. We propose to start with three main research questions:
  • 1. How the battery industry value chain is structured and how is this structure evolving?
As shown by Wang and Zhao (2021) and by Heim et al. (2021) for the case of China, the value chain of the battery industry is not structured yet. Indeed, almost all the actors involved are trying to move up and down the value chain to capture different stages of production: mining companies are getting into cells production; cells manufacturers are buying mining companies and have almost all integrated the production and assembly of modules in packages, some have even moved into car assembly; several car manufacturers have integrated the assembly of modules in packs and are moving towards cell manufacturing or even mining; and many of these actors have integrated the production of battery management system. All these strategies of vertical integrations aim at capturing value added, gaining power in the value chain, or even more fundamentally defining how the value chain is structured and who controls it.
Which actors are gaining more power and which strategies have been more successful? How the value added is distributed along the value chain also depending on the different types of batteries with different types of raw materials, performances and costs? When the dust will settle down after the battle, how many of these companies will survive and what the industry would look like? What will be its dominant design and which will be its dominant players?
  • 2. What roles are States playing in the race to build and develop a battery industry for electric vehicles?
China, and to a lessen degree Korea and Japan, have taken the lead in the race to build a battery industry for EVs.
What role has the State played in this process? What type of tools, regulations and institutions have been developed and used to promote the emergence of this new industry? How, in particular in the case of China, the development of the battery industry is connected with the development of the “new energy vehicles” industry?
As the electrification of sales is accelerating dramatically, all major developed and developing countries are now trying to catch up with China, Korea and Japan. The battery industry has become a strategic sector with important geopolitical implications. It is also expected to crucially compensate for the hundred of thousands of jobs that will be lost in the production of internal combustion engine.
What role do public policies play in this process of catching up? Do we see a return of the “entrepreneurial state” as more ambitious industrial policies are announced, notably in Europe? Can countries in the Global South that have access to strategic raw materials climb up the value chain (see Montmasson-Clair 2021)? Can Western countries such as the US, Germany and France challenge the dominant position of China on battery technologies, in particular concerning the next generation of battery – the solid state? Can they contest the monopolistic control acquired by China on the extraction and refinery of raw materials (on this see Jetin 2021)? Will the State’s sponsored structuring of a battery industry in these high wages countries contribute to the reshoring of car manufacturing, or will it further extend the process of regional integration and the relocation of automotive production towards low wage countries? And finally, which role do States play in the establishing of a recycling sector for the raw materials used in the production of battery?
  • 3. How national and transnational regulations will deal with the battery “paradox” of being at once the main green technology selected to decarbonise transports but also a very pollutant industrial product whose greening properties can be contested?
The extraction of raw materials for batteries is extremely pollutant and is expected to increase tenfold in the next 8-10 years. The production of batteries requires much more energy than the production of internal combustion engines, and depending on the carbon intensity of the energy used they do still significantly contribute to CO2 emissions and global warming. So far there are no national or international regulations that penalise batteries (via taxes or rules of access to the market such as certifications or technical properties) on the basis of their overall environmental impact or of their social impact when, for instance, working conditions and child labour in mining is considered. But under the pressure of environmental NGOs and also as a tool of competition and industrial policies, these regulations are now under discussion, and in the case of Europe for instance, a new regulatory framework concerning batteries and waste batteries has been proposed in 2020 (including a carbon footprint) and is expected to come into force by 2027/2028.
How these new regulations are conceived and negotiated? How will they affect the availability and cost of raw materials? How will they define the types of batteries produced and their features? How will they influence the location of battery production (depending for instance on the carbon intensity of the energy produced in different countries)? How will they modify the conditions of batteries trade and usage? Will these regulations be capable of solving the “battery paradox”? What kind of trade-offs or compromises will they have to make in order to keep the electrification drive going? And, finally, what type of resistances and/or conflicts might they trigger or solve?
 

 
The goal of this research group is to build a common analytical framework to foster joint and collective publications and research projects. The first step will be to have a first meeting in February 2022 (see below). The second step will be to organize one or more panels at the next International Conference of Gerpisa next summer in Detroit and to produce a joint publication following the conference. Participation in this group is of course not contradictory with participation in other Gerpisa working groups. If you are interested and you wish to participate and to attend the first WG meeting in February 2022, please contact: juan.carbonell_yanez@ens-paris-saclay.fr and lorenza.monaco@ens-paris-saclay.fr
 
Next meetings / seminars / conferences: 

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Concéption Tommaso Pardi
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