On Tuesday, General Motors Co. announced the single biggest manufacturing investment in its history – $7 billion to expand electric vehicles and battery production. On Wednesday, South Korea’s LG Energy Solution said it was raising $11 billion to develop the next-generation batteries, investments that point to the future of innovation.
Whether for electric cars or for off-grid applications, investments in battery technology hold the key for competitive growth, and companies around the world are taking positions and staking a claim in markets where high-quality battery technology will be important.
LG Energy Solution said in a release that the total proceeds from the share offer would be used to expand its facilities in Korea, North America, Europe, and China.
Specifically, the new capital will be spent on expanding capacity in the Ochang facility in Korea and recapitalise its operations in North America, Europe, and China to finance their expansion. Money will also go to research and development (R&D) for next-generation batteries and quality improvement.
“Through the IPO, we plan to pre-emptively respond to explosive battery demand and continue with battery R&D to become the best in the world,” said Kwon Young-soo, vice chairman of LG Energy Solution.
LG Energy Solution battery usage reached 56.2GWh as of October last year, doubled from a year ago, to power 23 percent of global EVs on the roads, followed by China’s CATL with 28.2 percent, according to the latest data by market tracker SNE Research.
Concerns about climate change are driving the demand for more clean, renewable energy. New trends in energy storage are being shaped by lithium-ion batteries.
However, battery companies are constantly experimenting to find chemistries that are cheaper, denser, lighter and more powerful.
Research is ongoing to use innovative compounds that can store more lithium in positive and negative electrodes and will allow for the first time to combine energy and power, notes Saft, a battery maker and a wholly-owned subsidiary of TotalEnergies.
There is ongoing research on lithium-sulphur batteries employing processes that will have applications in uses requiring long battery life.
Experts are also seeking to improve solid-state batteries and could come into the market soon as technological progress continues.
“The first will be solid-state batteries with graphite-based anodes, bringing improved energy performance and safety. In time, lighter solid-state battery technologies using a metallic lithium anode should become commercially available,” said Patrick Bernard, Saft research director
Car makers have scanned the horizon and have thrown their hearts fully into the ring. For long, Tesla dominated the electric car market but companies like General Motors are angling to grab a bigger share of the market.
Auto makers are shifting their portfolios and plants to build electric vehicles. Last September, the Ford Motor Co. jolted the industry when it announced plans to spend $11.4 billion on new production sites in Tennessee and Kentucky to build electric vehicles and batteries.
Not to be outdone, GM proposed spending more than $30 billion through 2025 to meet its stated goals of 30 EV product offerings globally by 2025 and 1 million EV sales in that same time frame.
Analysts project that GM could overtake Tesla as the top US-based seller of electric vehicles by 2025. IHS Markit predicts that Tesla’s share will continue to lower, to 20 percent in 2025, as larger auto makers such as GM release an influx of new vehicles.
GM’s $7 billion investment is aimed at increasing the production of electric pick-up trucks and the construction of a new EV battery cell plant. The investments include $2.6 billion for a new battery plant through a joint venture with LG Energy Solution in Lansing, Michigan.
“We will have the products, the battery cell capacity, and the vehicle-assembly capacity to be the EV leader by mid-decade,” GM CEO Mary Barra said in a statement.
Analysis by the Paris-based International Energy Association (IEA) indicates that this is a passing fad. Electric cars sales have shown real resilience to volatility in the wider car market.
In 2021, IEA found that in a few key car markets – such as Germany, sales rose above 34 percent, the United Kingdom (28%), France (over 23%), and China (18%).
To date, around 34 countries have announced policies that set a future deadline for banning new registrations of internal combustion engine (ICE) cars. This has been accompanied by announcements from auto makers such as Ford, Volkswagen, and General Motors of plans to phase out ICE cars from their production lines.
Read also: Nigeria dithers as battery storage investment soars
Systems that capture the energy and store it for later use, either to supply power to an off-grid application or to complement a peak demand, are the emerging energy sector investment frontier and African countries including Nigeria are playing on the margins.
Investment dollars are shifting from large-scale utilities for battery-based energy storage systems since Tesla provided a proof of concept for the commercialisation of electric cars and advanced battery technology.
Energy poor Africa is not yet a key investment destination for EVs and battery technology. There are bright spots though. Last year, South African SME, I-G3N, which develops lithium-ion batteries, raised $1.3 million in investment.
I-G3N, the only black empowered female-owned SME to successfully develop lithium-ion batteries specifically for the African continent, received investment from Edge Growth and the ASISA ESD initiative.
I-G3N is among the few South African lithium-ion battery manufacturers that serve over 60,000 installers of solar and backup power systems in Southern Africa, with their high-quality products having among the lowest failure rates in the market.
In Nigeria, battery manufacturing is bogged by imports from China and India. Batteries used in Nigeria are mostly for automotive and inverters adopted as an alternative backup to electric power.
Yet batteries will increasingly become important. In the IEA’s Net-Zero by 2050 Scenario, it forecasts that total installed battery capacity would need to expand by 35-fold between 2020 and 2030 to 585GW. It imagines that over 120GW of battery storage capacity is added in 2030, up from 5GW in 2020, implying an average annual growth rate of 38 percent.
All over the world, governments and businesses are drawing up strategies to grab a piece of what is shaping to become a juicy pie and Africa, especially Nigeria where over 80 million people without access to electricity cannot stand aloof.
