Ecological transition - The gigafactory between risks and opportunities

Paolo Scudieri, president of Anfia and owner of one of the major Italian manufacturers of car components (Adler Group), has harshly criticized electric mobility from the stage of the Motor Valley Fest. Some of the harshest judgments have been reserved for the production of batteries: “Gigafactories are just a way to wash your face.” It will be like this? Indeed, a recent report from consulting firm McKinsey raises quite a few questions about what the risks associated with gigawatt-hour factories are.

The situation. First of all, let’s see what the current situation of the projects is, relying on the data of Benchmark Minerals, which since 2015 has been tracing the evolution of a fundamental sector for the production of electric cars. According to the May surveys, the London-based company counted 304 projects in the pipeline, for a total capacity of 6,387.6 gigawatt hours, 68% more than in May 2021. In the last 12 months alone, over 100 new plants have been tracked by the Benchmark Minerals, which attributes the strong increase to the acceleration given by manufacturers to their electrification and decarbonisation strategies.

The Chinese risk. The cold numbers of London society do not hide, however, one of the problems raised by many in recent months, namely the dominance of China and the consequent dependence of Western countries. In fact, China has 226 facilities set to go into business by the end of the decade: this is over 75% of all the gigafactories monitored by Benchmark Minerals. By 2031, China is expected to have nearly 4,500 GWh of capacity, 70% of the total. The West therefore remains very late: there are only 23 structures planned in North America and 30 in Europe. The reasons are known: the Country of the Dragon controls a large part of the “mountain” of the supply chain, that is, the raw materials. Something could change in the next few years and not only due to the push of institutions to create integrated value chains: the Biden administration, for example, has invoked the “Defense Production Act” of 1950 to increase national production of critical materials for batteries. . In addition, the car manufacturers themselves are trying to “vertically integrate” their activities to avoid suffering shortages of supplies or too volatile prices.

McKinsey’s alarm. The risks associated with the production of batteries are not only these. A recent research by McKinsey, in addition to highlighting the usual obstacles to the adoption of the electric mobility such as the lack of capillary recharging networks or the difficulties in procuring materials such as lithium or cobalt, highlight further problems: an insufficient number of gigafactories and a low productivity of existing plants. The consultancy firm notes, first of all, that “if the world demand for electric vehicles grows as expected, by 2030 the sector will need 200 new gigafactories, in addition to the 130 already existing”, but “the complications during the design and construction may delay the start of production for 12 months or more ”. However, these are difficulties that can be solved, perhaps by paying more attention to the choice of suppliers. However, McKinsey points out, “after the start of a gigafactory, the challenges do not disappear: many new plants have experienced lower production than expected due to continuing labor shortages, unexpected downtime and operational problems”. In short, not all that glitters is gold: the opportunities are enormous, but so are the risks.

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