Amid setbacks for European battery manufacturers, competition between South Korean and Chinese companies in Europe’s battery market is intensifying, with market leaders like LG Energy Solution, SK On, and CATL vying for dominance. This comes as European electric vehicle (EV) sales experience a downturn, fueled by Germany’s withdrawal of EV subsidies, which had been a critical driver of growth.
Recent reports show that South Korean firms, which once held a commanding 70% market share in Europe in 2020, have seen their presence shrink to 50% this year. Meanwhile, Chinese manufacturers like CATL and BYD have rapidly gained ground, with their combined market share jumping to 42%, underscoring the growing dominance of Chinese firms in this crucial market.
Northvolt Faces Major Setbacks Amid European Challenges
Among the most prominent European battery companies facing hurdles is Northvolt, Sweden’s largest battery manufacturer. Northvolt has recently announced that it will cut 1,600 jobs, which account for approximately 20% of its global workforce, due to challenging market conditions. The company’s restructuring is part of a broader strategy to weather the economic climate, focusing on ramping up production at its flagship Northvolt Ett facility.
The job cuts are spread across Northvolt’s key sites in Skellefteå, Västerås, and Stockholm, with the largest impact in Skellefteå, where 1,000 positions will be lost. Northvolt’s decision also includes halting plans to expand the Northvolt Ett facility, which was set to increase its annual manufacturing capacity by 30 GWh. Additionally, the development of the company’s cathode active material facility has been placed on hold, further signaling the firm’s revised ambitions.
Northvolt has been hit particularly hard after the cancellation of a €2 billion contract with BMW, which led to the company reassessing its growth strategy. CEO Peter Carlsson said that the firm’s immediate focus will be on boosting production at Northvolt Ett, which has already shown signs of recovery, tripling output since early 2024. “We now need to focus all energy and investments into our core business,” Carlsson noted, explaining that the strategic decisions being taken were critical for long-term sustainability.
European EV Market in Flux
The struggles of Western manufacturers like Northvolt and the delayed construction of Volvo Trucks’ new battery plant reflect broader issues in Europe’s EV market. Orders for electric trucks have fallen for five consecutive quarters, and the suspension of key projects, such as the Stellantis-Mercedes-Benz battery plant in Italy, has compounded the challenges. Italy recently redirected €200 million in subsidies meant for this project, following its construction halt in June.
However, hope for a market revival lies in Germany’s potential reintroduction of EV subsidies, which could stimulate growth. Reports suggest that Germany may offer €6,000 for new EV purchases and €3,000 for used EVs in a bid to encourage consumers to scrap old combustion-engine vehicles. This policy shift could reignite demand in Europe’s largest EV market, providing a lifeline for struggling European manufacturers.
Intensified Competition in the Battery Sector
While European firms struggle, South Korean and Chinese battery giants are positioning themselves to fill the gap. Korean companies are now targeting mid-to-low price segments of the European market, with LG Energy Solution and SK On focusing on high-voltage mid-nickel batteries, while Samsung SDI prepares to introduce its LFP+ technology. This strategy aims to defend their market share against the rapid rise of Chinese competitors.
China’s CATL, already a significant player, continues to expand aggressively in Europe. With a growing appetite for market share, Chinese companies are leveraging their cost-effective manufacturing and technological advancements to secure a foothold in the European market, intensifying the rivalry between South Korean and Chinese firms.
As the EV landscape in Europe shifts, Western battery manufacturers like Northvolt must navigate an increasingly challenging environment, marked by fierce competition from Asia and fluctuating market dynamics. The future of the European battery industry may well depend on how quickly it can adapt to these evolving conditions and capitalize on any resurgence in demand.
