Airbus and Batteries: What Should We Take Away From This?

This article was originally published in our "Décryptage Mobilité" newsletter. To receive future articles by email as soon as they are published, Subscribe now. By Aurélien Schuller, manager

In early May, the industry ministers of nearly 10 European Union member states made an important announcement as part of “ the European Battery Alliance " [1], an initiative that has been dubbed the "Airbus of batteries."
Although this project had been under consideration for 18 months, the new development is the shift to IPCEI status (Major European Investment Project), which will enable it to receive state aid as an exception to European rules (Article 107 of the Treaty on the Functioning of the European Union).

And the State aid could be substantial : This involves 1.7 billion euros in Franco-German aid by 2022. Supplemented by private funding, these funds would enable the construction of a pilot facility in France by 2020, followed by two production sites on either side of the Rhine by 2023. Beyond the industrial implications, the significance of this alliance can be viewed from both a climate and an economic perspective: In terms ofcarbon footprint, battery manufacturing accounts for a large portion of electric vehicles’ lifecycle emissions (40 to 60% for use in France, according to our calculations): the Producing them in Europe can help reduce these emissions very significantly, provided that the producing countries have a low-carbon electricity mix and that industrial processes are energy-efficient. In a recent publication [2], RTE assessed the reduction in the carbon footprint that would result from manufacturing a battery in France rather than in China: The gain is around 60% for a 40-kWh battery. It is worth noting that if the battery were manufactured in Poland, where the electricity mix is very carbon-intensive due to coal, the carbon footprint would be similar to that of production in China.

In terms of economic, Carbone 4 compared the Costs of an electric car compared to a gas-powered car [3], from a microeconomic perspective (from the driver’s point of view) or a macroeconomic perspective (from the government’s point of view). From a macroeconomic perspective, It is not yet clear whether the decline in petroleum product imports would be offset by an increase in imports of electric vehicle batteries, given the current prices and sources of these batteries. To have a significantly positive impact on the trade balance, Let's hope that the cost of these batteries will go down in the future (which is generally the trend) and, above all, that the value chain is becoming increasingly integrated within our region. This news about the “Airbus of batteries” is therefore welcome because It will enable better economic control over value chains (in France or at least in Europe) and a smaller carbon footprint from battery manufacturing, provided that production facilities are located in countries where the electricity mix is less carbon-intensive (or will be in the short term) than in China or South Korea.

Article written by Aurélien Schuller – Manager

Sources: [1] Les Échos [2] RTE [3] Carbon 4