European climate tech must collaborate with China, says battery tech founder
China supplies over 80% of the worldâs lithium-ion batteries, and almost all of the global supply of anodes, a key battery component. Many of Europeâs best-funded climate techs â including Swedenâs Northvolt â are built on the premise of alleviating that dominance.
But Elinor Batteries, which was founded in 2023 with the plan to build a gigafactory in Norway to produce energy storage batteries, has taken a different approach.
After watching older European battery manufacturers struggle to set up their factories, Elinor decided to partner with a Chinese company, Morlus Technology.
âA lot of European battery initiatives are struggling to actually get to series production, so we figured out that we wanted to mitigate the risk,â CEO Arne Fredrik LĂ„nke tells Sifted. Morlusâ founder, Shen Xi, previously led battery design and construction for BYD, the Chinese company which overtook Tesla as the worldâs top EV seller this year.
Through the partnership, Morlus will help Elinor build the factory. Elinor will also license Morlusâ battery tech for the cells it produces.
While Elinorâs gigafactory is under construction, it plans to supply its customers with cells produced at Morlusâ site in China. âWhen we see that the customers are actually going to be willing to pay what it costs to produce in Europe, we will. Until then, we want to source our products from China,â LĂ„nke says.
âIt's really important for us to move fast in the battery space, and in doing that, you can't avoid working closely with China the way things are right now,â he says.
In LĂ„nkeâs view, working with Chinese expertise to build up battery production in Europe will trigger a components supply chain to be established on the continent, making it easier for domestic production to locally source parts in the future.
Elinor is not alone in its partnership with China. Although marketed on the premise of removing European reliance on China, Swedish gigafactory maker Northvolt uses Chinese machinery in its factory.
Likewise, UK climate tech Field, which deploys energy storage systems, recently signed an agreement with Chinaâs Envision Energy, to supply hardware and equipment.
Norwegian battery startup Beyonder is also working with China. The company told Sifted it âhas accessâ to 2.4Gwh of production capacity per year in China. âOur long-term strategy is to have production capacity in Europe â when we have financial strengths to carry such investment,â Beyonder CEO Tove Ljungquist told Sifted.
âGraphite is already game overâ
Elsewhere in the climate tech world, others remain convinced that Europe needs to go it alone to shore up its battery supply chain.
Rob Anstey, founder of GDI, an American company building a silicon anode plant in Germany, funded by the European Investment Bank (EIB).
In his view, the extent of Chinaâs battery plans is yet to be realised by the rest of the world. âChina is going to vertically integrate the entire industry and eventually they will probably stop selling batteries and only selling vehicles,â he says. Should Europe fail to set up its battery production and that were to happen, the continent would then have to buy actual vehicles directly from China.
Competing with China on existing battery composition is futile, Anstey says, meaning European production needs to switch to forms of battery that Chinese companies are yet to dominate. For GDI, that means replacing graphite anodes with silicon ones.
âGraphite is already game over. They have the lowest cost of production and 93% of the volume,â Anstey says. âNo one can build a plant and come anywhere near their selling price, therefore they cannot finance a factory. Therefore we have to go to silicon because they have not dominated that market yet.â
â Freya Pratty, senior reporter
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