A material opportunity: Developing the North American and European advanced battery chemicals industry

By Erwin Douma and Jonathon Wright

"It will take many players acting in tandem to prop up an entire battery industry and value chain in North America and Europe. This opportunity has the potential to be transformational for many chemical companies."

Chemical companies have a once in a hundred-year opportunity to enter a booming market that will become mainstream by the end of the decade. The time to act is now. Players can establish market-leading positions if they act decisively to organize around a battery-focused proposition, access and develop technology, procure cost-competitive raw materials, manage capital investments, and secure product outlets. Capturing the opportunity will require bold decision-making and partnering ability. The size of the prize is colossal, a market of USD ~150 bn in North America and Europe. In this installment of our ‘ Electrification in the Age of Deglobalization ’ series, we unpack the material opportunity for the North American and European advanced battery chemical industry.

With the global demand for lithium-ion batteries expected to grow above 30% p.a. until 2030, understanding what the world will look like in 2030 and beyond is critical. Today, 80% of battery cell production capacity and 60% of demand is based in China, but we can already see the winds of change.

There are five key reasons why the future will look different, and that a large local end-to-end value chain will be developed in North America and Europe.

• Increasing demand outside China
• Favorable regulatory environments in the US and Europe
• Economics of supply
• Supply chain risk reduction for OEMs
• CO2 reduction

These factors are working in concert with each other and will create the conditions for the development of a localized end-to-end value chain in North America and Europe. At present, there are few assets in place to serve this large, high-growth demand. Constructing the industry to serve this market is both a major challenge and a significant opportunity for chemical companies across the materials landscape.

Players looking to enter the battery materials market will have to focus on five key success factors to capitalize on the opportunity, assume a leading position, and mitigate risks. Achieving success across these factors requires boldness and partnering ability.

• Organize around a battery-focused proposition
• Access and develop technology
• Procure cost-competitive raw materials
• Manage capital investments
• Secure product outlets

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