View from Brussels: Volvo’s electric expansion sparks debate
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With a big announcement on Wednesday, Volvo claimed pole position among the big manufacturers in the race for the electrification of its car fleet. But what about the eternal problem of sourcing enough battery capacity?
My girlfriend works in the Swedish church as a journalist for internal communications and she’s just come up against the problem with electric cars.
Some background: the Swedish church is one of the most progressive organisations in a very politically correct country – the Bishop of Stockholm is a declared lesbian. And it’s gone big on social media – every bishop tweets. It appeals to the marketplace of ideas by mentioning religion as little as possible and going on about the climate a lot. Thinking that the spirit of religion among the secular young is often manifested in high sentiments about the planet’s survival and the realisation that the Church needs somehow to capture that.
As a result, the local bishop writes much about environmental issues and the local diocese has bought a number of electric cars. They haven’t entirely replaced the diocese’s fossil fuel fleet, but because their range is limited and - just as importantly - perception of their range is limited, they often stand unused. Consequently, there is always competition for the few remaining petrol cars when staff need wheels to travel around the region, lecturing about God and the environment or attending seminars on sustainability. Because of the constant overbooking, my girlfriend often has to resort to using our personal (petrol) car to take her places on the job.
It all encapsulates the story of the electric car at the moment. Everyone feels positive about them, but they don’t deliver on their promise quite yet.
A Swedish company, Volvo, is trying to change that, based on the notion that if you make promises then everything else will follow. That is what business is about: confidence in investment. So Volvo, which pioneered safe driving with the first seatbelts in the 1950s, this Wednesday made worldwide headlines with talk about it phasing out Volvo’s fossil fuel fleet from 2019. Actually, if you look at the claims closely, you’ll see that Volvo is not phasing out fossil fuel at all for the largest component of its new range. These so-called mild hybrids will mainly run on petrol, with an electric motor adding extra zoom when you accelerate and recharging when you brake. The result is that it uses slightly less petrol; that is all. The electric booster motor is so small it doesn’t even need recharging by a cable connected to the electricity grid.
Still, it made for good headlines in the international media and, to be fair, Volvo is simultaneously introducing a whole new range of all-electric models while simultaneously promoting a middle category of genuine hybrids which can be recharged at home. So, from 2019, Volvo will be selling three types of car. Mainly petrol with small electric power assistance, genuine hybrids and all-electric cars.
Volvo claims it is a step in the electric car direction and that you have to walk before you can run. The company’s PR people insist that it has gone further than any other major company in the electric direction and, if nothing else, chief executive Håkan Samuelsson says that the technology will help Volvo achieve upcoming EU ceilings on emissions of 95g of CO2 per kilometre.
The Scandinavian countries are very conscious of the fact that they are, and are seen as, societal and technological innovators. These are small countries that live and die by their manufacturing export industry and their expertise is putting a finger up to the wind and seeing where innovations, often thought up elsewhere, are taking us and then seeing if they can introduce these innovations into their own small, wealthy and highly educated countries and make them work.
Scandinavian manufacturers benefit from innovation-friendly governments and if the home market works out, they can use that as a base for an expanding into the global market. Volvo hopes to use Sweden as a test bed and that this will put them ahead of their competition, which includes Audi and VW.
However, distances in Sweden are large in this sparsely populated country. The big problem of electric cars, that of range, is related to the limits of battery capacity and and the difficulty to source the rare materials to make large quantities of batteries. Volvo has extended a hand to Swedish battery manufacturer Northvolt, which is building a factory in Sweden that looks set to have a capacity of 8GW hours per year in the first phase, hoping to expand to a total of 32GW hours when the whole factory complex is finished.
Northvolt’s efforts are certainly needed. Europe is the site of just two battery factory projects at the moment: LG is building one in Poland and Samsung is building one in Hungary. The capacity for the one in Poland is 3.5GW hours, which is enough to electrify 50,000 cars. In Europe, 20 million cars are made annually. In other words, a 200-fold increase in battery factory capacity is needed to replace Europe’s entire fossil fuel fleet with electric cars.
Even Northvolt’s efforts, if successfully expanded to its maximum planned capacity of four factory units, able to piggy back on contracts from Volvo, could only electrify less than half a million cars a year –a few per cent of the European total car build. Many of the rare minerals needed for car batteries, such cobalt, are sourced from politically unstable countries like the Congo.
So, are electric cars all pie in the sky? Well, new French president Emmanuel Macron has pledged a stop of the sale of petrol and diesel cars in his country by the year 2040. His environment minister, Nicolas Hulot, a former environmental activist, says that the proposal was made for health reasons as much as anything else. And France is not alone. Norway has promised to phase out fossil fuel cars by 2025, as has Holland, while some German states have made a pledge to phase out fossil fuel cars by 2030.
Is this just virtue-signalling politics which will end up meaning nothing? Or will it genuinely help manufacturers move in the right direction? Is this even the right direction? Anyhow, the enormous requirement for additional battery manufacturing capacity is a reminder of the challenges ahead.