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The production of lithium-ion batteries requires an extensive ecosystem of companies. How will that get off the ground in Europe? And which players does it require?

A Vulcan Energy test facility where lithium is pumped from deep underground | Credit: Adrian Müller / Vulcan Energy Resources

The European Union wants to become self-sufficient in energy. Storing energy is an essential part of that. So we need to start producing batteries, and on a large scale. Nearly 10 million electric cars are expected to be sold annually in Europe by 2030 - all cars with lithium-ion batteries. How will Europe ensure that those batteries can also be produced in Europe?

Investing in the energy transition

EIT InnoEnergy is an investment company whose goal is to stimulate the energy transition in Europe. "We are what you call technology agnostic," says Jacob Ruiter, CEO of InnoEnergy Benelux. "That means that we are not that interested in what technology we invest in, as long as it makes a clear contribution to the energy transition. We do look for a mix of investments, to have both different value chains in our portfolio, as well as different risk profiles."

The investor was founded 14 years ago as a collaboration between universities, research institutions and industry. InnoEnergy has become one of Europe's largest green technology investors. Setting up new value chains is one of its goals. This is why in 2017 the investor was at the forefront of the European Battery Alliance, a partnership between all kinds of parties involved in battery technology.

Since the founding of the European Battery Alliance, the playing field for batteries has looked very different, Ruiter notes. "Interest in battery manufacturers has increased dramatically. The European Investment Bank is investing colossal amounts to get such companies off the ground. Lithium mining is also in the spotlight. And investments are being made to develop alternative materials. Such as alternatives to cobalt, to become less dependent on countries like Congo."

Cross-section of the value chain

The battery value chain is complex. Many different companies are involved in developing new technologies and producing all the components. Using three companies that are part of the European Battery Alliance, we map out what it takes to produce batteries from European soil.

The source

The most important component of a lithium-ion battery is - not unexpectedly - lithium. This metal is found in numerous places in the Earth's crust. The largest concentrations are in Chile and Australia, where by far the most lithium is also produced. There it is extracted in large, open mines.

It is proving difficult to open such mines in Europe. In Portugal, for example, citizens successfully resisted the landscape degradation associated with excavating large, deep mine pits. And in Serbia, there was widespread concern about the quality of drinking water. Protests ensured that advanced plans for a lithium mine were called off after all.

A much more elegant solution than an open pit mine is to pump lithium from deep underground. That's what Vulcan Energy is doing. In southwest Germany, the company is working with "Adsorption-type Direct Lithium Extraction Technology. Salty water rich in lithium is pumped up from a depth of 3,000 to 5,000 meters. After the lithium is filtered out of that brine water, it is sprayed back underground. Above ground, only a relatively small technical installation is visible - similar to how gas is extracted in the Netherlands.

Lithium and energy production

And the biggest asset? The water coming from deep underground is boiling hot. That heat is used to generate electricity. "The production process itself needs electricity. But less than the electricity we generate. That's the sympathetic thing about this solution," says Christian Freitag, vice president of supply chain at Vulcan Energy. And the water needed for production can be recycled each time. "It's a closed system."

The technology can be used in more places in Europe. Freitag: "In principle, you can apply it anywhere you work with geothermal plants. But of course there has to be enough lithium in the ground. And the salinity of the brine is important: the saltier, the better." In addition to southwest Germany, where Vulcan itself operates, Freitag believes there are also numerous suitable locations in northern Germany and France.

Vulcan has great expectations for the technology. Commercial production will start in the second half of 2026. The goal is to produce 24,000 tons of lithium per year, enough for about half a million electric cars. Freitag: "It will probably never be able to meet the global demand for lithium, but this has the potential for Europe to become an important source of lithium."

The anode

To understand what the company GDI does in the value chain, we need to dive a little deeper under the battery hood. Namely, GDI makes anodes for lithium-ion batteries. Batteries consist of an anode at one end, and a cathode at the other. Charged particles move between them. In the case of lithium-ion batteries, these are - again, not entirely unexpectedly - lithium ions.

"What we need is a NATO of batteries," he said.

In most lithium-ion batteries, the anode is made of graphite. The anode plays an important role in the capacity and charge rate of batteries. Therefore, scientists and companies are looking for new materials that outperform graphite. American-origin GDI has put its cards on anodes made entirely of silicon. This makes the battery safer, charges faster, and has a higher energy density - allowing a car to drive farther on a single battery charge.

GDI works to produce its anodes using nano technology developed at TU Eindhoven, says CEO Rob Anstey. The production method was originally intended for making wafer-thin, flexible solar panels. After a long search, the American company ended up in Eindhoven in 2015 to scale up their production. "It really comes down to production methods in the advanced battery world now. If you don't already think about how to produce it on a large scale while developing a product, the industry will drop out."

Combining value chains

The techniques needed for that large-scale production sometimes come from unexpected places to an outsider. For the next step in their development, GDI has partnered with AGC, one of the world's largest flat glass producers. They produce all kinds of high-tech glass, which, like GDI's anodes, is made of silicon. Together, the companies are further developing existing glass coating technology for the mass production of all-silicon anodes.

GDI operates in both the Americas and Europe. Anstey sees this as a major advantage. "It is nonsense to present Europe and America as opposites in the energy field. The American and European chains are very closely intertwined, you have to make smart use of that." He does look with a slanted eye at competition from Asian countries. "What we need is a NATO of batteries."

The gigafactory

Verkor is the final piece of the battery chain. The company is building a gigafactory for battery cells in Dunkirk, France. Starting in 2025, 16 gigawatts of batteries should roll off the assembly line each year, enabling Renault to make 300,000 electric cars. Verkor has only been in existence for three and a half years. InnoEnergy was closely involved in its creation.

"A few years ago we were surprised at the small number of initiatives for large-scale battery production," says Ruiter. "So we started writing a business plan and then found a team to develop the plan. Meanwhile, we started looking in our own ecosystem for suitable shareholders." A core activity of InnoEnergy is reducing risk for investors. Connecting private and public parties to companies creates trust. This dares other investors to step in and makes it possible to set up large, capital-intensive projects.

Building a network

Besides breaking down financial barriers, InnoEnergy was also important for Verkor's network. So says Gilles Moreau, the company's co-founder and chief sustainability officer. "In the early stages, we needed partners, talented staff, access to universities and contacts in politics and civil service. We needed to be introduced to the whole ecosystem."

This is the time to set up large production facilities in Europe, Moreau argues. "Europe is going to ban the internal combustion engine from 2035. In the next ten years we are going to need a lot of batteries. If we don't start producing them ourselves now, the market will be taken over by Asian battery manufacturers."

And why is this gigafactory in France, and not in, say, the Netherlands? Ruiter explains that France is an interesting location for several reasons. French nuclear power plants provide a constant supply of cheap electricity. In addition, there is plenty of space available, made accessible by good infrastructure. And the French government has an active industrial policy. We can learn something from that, Ruiter believes. "We in the Netherlands are pretty good at innovating, but when it comes to scaling up, we lag behind other countries," he says. "France takes a much more top-down approach to decision-making, with top government officials strongly pushing for industrialization. Decisiveness is important to get large projects off the ground."

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