BMW’s Battery Contract Cancellation Highlights Need for Prototyping in Cell Manufacturing

Recently, it was reported that German automotive giant BMW had canceled a €2 billion contract with Swedish battery company Northvolt, which it had signed in 2020. This was apparently due to production delays and technical issues in ramping up cell production at its gigafactory, thus being unable to meet its supply obligations to the automaker.

Northvolt, a company founded by former Tesla executive Peter Carlsson and Paolo Cerruti, installed Europe’s first battery gigafactory in late 2021, about 200 kilometers south of the Arctic Circle in Skelleftea, Sweden. This is a major milestone for Europe in its quest to join the global battery race and compete with the Asian giants that dominate battery manufacturing, such as China’s CATL, Japan’s Panasonic, and South Korea’s LGChem. In fact, Nortvolt aimed to stand out from other manufacturers by committing to using 100% renewable energy to run its production facility, as Sweden has one of the greenest electricity grids in Europe.

However, BMW’s decision to cancel the local (in Europe) supply contract for batteries for its EV portfolio and turn to established battery manufacturers in Asia, provides an insight into the difficulties new entrants face in setting up giant cell manufacturing plants and being able to demonstrate continuous operation with reliable production throughput.

In India, a number of companies have announced plans to set up giant cell manufacturing plants. Seven companies, including ACME Cleantech Solutions Private Ltd, Amara Raja Advanced Cell Technologies, Anvi Power Industries Private Ltd, JSW Neo Energy Ltd, Reliance Industries, Lucas TVS Ltd and Waaree Energies Ltd, have submitted bids for the production of advanced chemistry cells under the Centre’s production-linked incentive scheme.

While most of these companies have announced the availability of cell technology through in-house development or partnerships, large-scale industrialization or commercialization of these technologies is a major concern. As Northvolt’s experience shows, scaling up cell manufacturing is not straightforward and moving up the commercialization ladder is essential for the success of the Indian battery industry.

The nascent lithium-ion cell manufacturing ecosystem in India faces multiple risks: technology risk, policy risk, demand risk, financial risk, supply chain risk and talent risk. A joint effort to plan an indigenous cell manufacturing roadmap by the central government’s Department of Science and Technology (DST) and Delhi-based think tank Centre for Science and Environment, supported by extensive stakeholder consultations, has highlighted the need for setting up rapid prototyping centres (RPCs) for cell manufacturing.

An RPC is envisioned as a dedicated facility with specialized equipment such as coating machines, calendering machines (high pressure rollers), and electrolyte filling machines, among others, to advance the technology readiness level of new cell technologies from laboratory prototypes to industrial scale manufacturability.

Moving from laboratory cells to industrial-scale cells for use in commercial applications essentially involves an increase in the physical dimensions of the cell as well as a significant increase in production volumes. This is accompanied by challenges such as maintaining electrode coating uniformity and accurately stacking electrode and separator sheets (key layers of a cell) across large volumes.

It is difficult for start-ups and companies to create consistent prototyping samples and reproduce industrial processes during the early stages of manufacturing industrial-scale cells. This requires the establishment of RPCs, without which cell characterization (evaluation of parameters such as capacity, lifetime) and safety testing are hampered. In addition, lead times for procurement of test and qualification equipment are long.

Some companies in the battery manufacturing sector shared their expectations from a RPC at a recent stakeholder consultation meeting organised by DST at the Indian Institute of Technology, Tirupati. RPCs would be extremely helpful for process and product validation, global sourcing of intellectual property and attracting global talent, said Vijayanand Samudrala, managing director of Amara Raja, one of India’s largest automotive battery manufacturers.

Currently, lithium iron phosphate powder produced in India is sent to labs in countries like the UK and Japan for validation of materials in cells, due to the absence of an equivalent domestic facility, said a representative of Hyderabad-based Altmin, India’s leading manufacturer of active cathode materials. To fill this gap, the role of the indigenous RPC cannot be overemphasized, they added.

The aim of a RPC should be to reduce time to market and production costs for battery manufacturers, said Pratyush Sinha of Lohum, a leading battery recycling company based in Delhi-NCR.

The objective of the RPCs would therefore be to replicate commercial manufacturing on a pilot scale and establish quality control, manufacturing readiness and a procurement plan for the companies. It would also help to create a skilled workforce in the country, well equipped to work in the battery manufacturing industry.

Global references for RPC-type facilities include the UK Battery Industrialisation Centre, the US Advanced Battery Consortium and the European Fraunhofer Institution for battery cell production.

Political and financial support for such an initiative will prove to be a useful step in building local capacity to advance electric mobility as well as battery energy storage in the country.