Earlier this year, I was invited to tour Tesla’s Gigafactory in Nevada.
Beyond the sheer scale of everything, what struck me most was how the people there communicated. They spoke with enthusiasm about overcoming setbacks, financial hurdles, and working towards ultra tight deadlines. They repeated their mission like a mantra - 'to accelerate the world's transition to sustainable energy'. They wore their struggles with pride. Tesla’s ascent to EV market dominance wasn’t a matter of luck and market timing, but of relentless innovation and perseverance.
2024 was undeniably challenging for many in the battery industry. While the industry continues to grow and evolve at an exponential rate, the journey to replace a multi-trillion-dollar fossil-based economy isn’t without hurdles. Fortunately, there are many reasons to be optimistic.
First, to the Cling Systems team. I couldn't be more excited to enter 2025 with you. Let's:
To everyone who supported and promoted us this year: Business Sweden, TECHARENA, Start Up Energy Transition, Sifted, Trucks Venture Capital, First Venture, Norrsken, Modo Energy, KOTRA, Global Carbon Council.
To our industry peers: Cellect Energy, CeLLife Technologies Ltd., ChromaWay, volytica diagnostics.
A big shoutout to Lina Wijk and Håkan Samuelsson for your invaluable contributions.
And finally, as we too have had our fair share of organisational readjustment, my heartfelt gratitude and best wishes to everyone who has been part of our journey - you're awesome.
With that said:
In 2024, global demand for lithium-ion batteries surpassed 1 TWh/year for the first time [1]. Meanwhile, the reported production capacity, reached a staggering 2.4 TWh [2]. Yes you read that right, in 2024 the global installed production capacity was 2x the demand (though actual production figures are less clear).
The plunging prices caused by the overproduction bring some positives, like cheaper battery systems supporting the electric grid, but the negatives outweigh them. Batteries are perishable, and demand for cells older than three years is significantly smaller than brand new. By our calculations, producers are sitting on over €20 billion worth of "idle" inventory. Without new sales processes and improved market access, much of this stock will end up in recycling or sold for pennies. Vast value and resource destruction hurting all battery producers across the board.
This surplus is largely driven by financial incentives in China and production plans based on overly optimistic forecasts, particularly regarding the speed of EV adoption [2,3]. Despite record demand for both EVs and stationary energy storage (ESS), the gap seems to remain for the next 5+ years [2].
Notably, the growth of EVs is not coming from established European or US car brands, but new and slick Chinese ones that are leapfrogging everyone else. Watch this video on carmageddon to understand the seismic market shift [4]. It has non-trivial financial consequences.
For example, Porsche SE are considering to write down their stake in VW by up to €20 billion (that's ca 40% and, yes, Porsche SE owns majority of VW not vice versa) [5]. To figure out how to put Europe back in the game, the European Commission is launching a Strategic Dialogue on the Future of the Automotive Industry in Europe in January 2025, under President Ursula von der Leyen's personal leadership [6]. Maybe a similar one should be launched for batteries?
Anyhow, on the other side of the pond, the USA's Inflation Reduction Act’s support for battery production appears relatively secure despite political shifts, as 90% of its benefits are concentrated in red states [7]. US will be a serious player in the battery game, regardless the new administration's fondness of green coal.
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China and Korea continues to dominate the global production, holding over 90% market share [8]. Yet, back here in Sweden, the people at Northvolt demonstrated grit [9] and I'm confident there can be giga-manufacturing in Skellefteå given the right ownership with the right experience. It's worth mentioning that the cell production at Tesla's gigafactory is in fact operated by Panasonic Energy Corporation of North America and not Tesla. Tesla's 30% of the total floor plan is for battery pack assembly, electric motor winding, and R&D. As we all know by now, cell manufacturing is incredibly complex and even the most experienced players struggle with inconsistent quality [10].
"It took 20 years, but we are finally close to being good at producing batteries" - a paraphrase from a VP at one of the three major Korean battery producers
Despite perfect production lines, the supply chains still cause painful headaches. They’re new, opaque, and full of endless and often counterintuitive regulations. Materials like lithium, cobalt, and nickel are never perfectly consistent and they’re perishable in many of the production steps - needing ideal storage and quick use within a couple of months. But here’s the upside: if commodity trading can figure this out, so can batteries [11].
It takes a village to raise a child and an entire country to build a gigafactory. China and Korea spent 20 years mastering it. It’s tough, it’s time-consuming, but it’s achievable.
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Speaking of critical raw materials, let’s talk about recycling. A battery-powered society depends on recycling for long-term sustainability, and while the recycling market is bound to mature, it remained difficult in 2024. Key reasons include:
Encouragingly, startups like tozero and cylib and others are making strides, but it’s worth noting that a staggering 49% of Europe’s previously projected recycling capacity for 2030 has been delayed or canceled in the last year alone [15].
Without a robust circular ecosystem, Europe risks dependency on external recycled materials just to meet its own regulations. Policies like the New Battery Regulation, the Critical Raw Materials Act and new circularity ISO standards - all adopted in 2024 - are well-intentioned and strongly advocate for reuse and recycling. But, if batteries sold in Europe must contain 16% recycled cobalt [16], and there is not enough available locally, European producers may find themselves importing recycled material from, ironically, China.
Here are four critical actions to make Europe's circular ecosystem competitive:
Well, why is circularity so important? 2 banger reasons:
First, batteries can be 98% recycled and the material can be used again and again indefinitely. The founder and CEO of the world's largest battery producer, CATL, even predicted that by 2040, mining for batteries could be entirely replaced by recycling [20]. Achieving this wouldn’t just be an industry milestone; it’s a transformational vision for the planet. It’s a vision I passionately share, and I couldn’t be more excited to help shape and build that future.
Second, circularity goes beyond recycling - it addresses the critical challenges of supply and demand imbalances. Selling used batteries is tough, but we’ve learned that the same processes - batch selling, high risk management, and catering to fragmented demand - apply perfectly to selling unused batteries that are a few years old. Circularity, therefore, plays a vital role in restoring financial balance. It’s not just a tool for sustainability; it’s a growth driver that helps stabilise and strengthen the entire battery ecosystem.
Batteries are taking over from fossil fuels at an exponential pace [21] and will redefine the trillion-dollar energy industry. And as the people at Tesla's gigafactory made clear, success in this industry depends on relentless innovation and perseverance - qualities the battery community demonstrates daily.
Thank you all for a fascinating and bumpy 2024. Here’s to an exciting and impactful 2025!
Happy New Year,
William
P.S. Thanks for reading! I know I’ve rambled on a bit and probably missed a bunch - so why not build on it together. What do you think defined 2024? What are your thoughts on 2025? And my favourite question: what’s your most controversial market prediction? Let’s hear it in the comments!
