E-mobility in Europe

E-mobility in Europe - Developing a lithium value chain in Europe

"Europe is investing in a competitive and sustainable battery manufacturing sector. We want to provide a framework that includes secure access to raw materials, support for technological innovation and consistent rules on battery production. We envisage a strong battery industry that contributes to the circular economy and clean mobility." – European Commissioner Elżbieta Bieńkowska

E-mobility transition driven by climate change legislation

In its efforts to combat climate change, the EU has set the target of achieving carbon neutrality by 2050. At present the transport sector accounts for over 25% of the EU’s CO2 emissions, including 20% from road transport, and is the only major sector of the economy that has seen CO2 emissions rise since 1990. As part of its wider policy goals relating to the environment, the EU is placing increasingly stringent legislation on the transport sector to substantially reduce its emissions over the next decade. While significant fines await any manufacturer which doesn’t meet the relevant targets, the legislation does offer notable incentives for greater production and sales of zero and low emission vehicles (ZLEVs, defined as emitting less than 50g/km of CO2) within a manufacturer's fleet.

EU CO2 emissions by sector (1990 level = 100):

Source: The EU, company

EU vehicle CO2 emission targets to 2030 (indexed to 100):

Source: The EU, company

FACTBOX - The Auto Industry in the European economy

The region’s auto industry is a major part of Europe’s economy. The sector employs (directly and indirectly) 13.8m people, equivalent to 6.1% of all jobs in the EU, generates turnover equivalent to 7% of the EU’s total GDP, and a €84.4 billion trade surplus. There are over 300 vehicle assembly plants spread across 27 countries in the region, producing over 19 million vehicles per year for the local market and export. The industry is also the EU’s largest investor in R&D, spending around €57 billion annually equivalent to 28% of total R&D spend in the area (Source: European Automobile Manufacturers Association)

Europe is already established as a major EV market

Europe is already the second largest market for EVs globally with 409,000 plug-in vehicles sold in 2018 and 261,000 in the first half of 2019. Significant penetration rates have already been achieved in several European countries such as Norway 49%, Sweden 8%, Netherlands 6.7%, Finland 4.7% and Portugal 3.4%, with an overall penetration rate of 2.5% achieved across the EU and EFTA last year. However, the impact of the tightening legislation and ZLEV incentives, along with growing consumer demand for the new vehicles, is expected to result in ZLEVs accounting for at least 15% of new car sales in the region in 2025 and 30% by 2030. In Europe’s c.16m vehicle sales per annum market this would equate to 2.4 million and 4.8 million per annum respectively, or 6x and 12x 2018’s sales respectively.

Driven by this legislation, European auto manufacturers are investing heavily (e.g. VW– an initial €30 billion over the next five years) in retooling manufacturing plants, securing battery supplies and developing extensive new model ranges to bring electric vehicles to the mass markets for passenger and commercial vehicles. Overall, the number of EV models available to European buyers is forecast to rise from around 100 today to over 300 by 2025.

Electric car models coming to market in Europe 2019-2025:

Source: Transport & Environment

Electric car production across Europe in 2025

Source: Transport & Environment

Based on this outlook, demand for lithium from Europe’s auto industry is expected to rise by at least 7x between 2018 and 2025.

Lithium demand from the European auto sector:

Source: Roskill

With demand for lithium set to grow in all major markets around the world, and supply forecast to be under pressure to keep pace, the EU and European-based end users are keen to catalyse the development of a dedicated local lithium supply industry, founded on raw material from sustainable, well managed, sources within the region. Savannah’s Mina do Barroso spodumene lithium project, the most significant spodumene project in the EU, is ideally placed to contribute to this surge in demand. Benefitting from excellent local infrastructure in northern Portugal, Mina do Barroso could supply up to 200,000t per annum of high quality, chemical grade, lithium concentrate which would form the first step in the production of LIBs for use in the European auto industry. Savannah’s annual production of concentrate would provide sufficient lithium for the battery packs of c. 300,000 Jaguar I-Pace or approximately 650,000 BMW i-3 vehicles.

Savannah’s Mina do Barroso lithium project is ideally located to supply the European market:

Source: Company

Along with the provision of raw material for the supply chain, a similar commitment is required in the battery material and battery cell manufacturing steps in the chain. To this end, multiple new battery plants (gigafactories) are planned in Europe over the next five years while those already in operation are set to be expanded.

131 GWh of battery capacity is planned in Europe from 2023:

Source: Transport & Environment

To ensure this ‘e-mobility revolution’ takes place as planned without causing an impact on the significant role the auto industry plays within Europe’s economy, the EU has created a number of bodies and initiatives to co-ordinate collaborative working relationships between up and downstream players in the new battery supply chain, and industry players and relevant external groups such as national governments, financiers (including EU administered entities), academia and the wider population. Savannah Resources is proud to be actively involved in a number of these initiatives which are outlined in more detail in our section on European Lithium Initiatives

Lithium Overview

Lithium Market Dynamics

Lithium Battery Industry Initiatives in Europe

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