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Western battery start-ups are turning to underused production lines in Asia to scale up their operations, taking advantage of the idle capacity left by aggressive investment in electric vehicle batteries.
Altris, a Swedish maker of sodium-ion battery materials, said it was in talks with a Chinese battery manufacturer to lease an idle lithium-ion production line and convert it to make sodium-ion batteries for energy storage.
Christer Bergquist, Altris’s chief executive, said the company was also exploring whether it could use other European suppliers with overcapacity.
“We see that in the sort of tier twos [subcontractors] and tier threes that initially built up for [EV battery] production. They now have idle capacity available and are actively looking at sodium,” he told the FT.
The move reflects a shift to more asset-light business models following the collapse of Northvolt, the Swedish battery group which went into bankruptcy after building large manufacturing operations from scratch.
Ion Storage Systems, a US battery start-up, said it was actively searching for excess capacity in south-east Asia to assemble its batteries and had held talks with more than a dozen suppliers.
The company has introduced solid-state batteries for wearable products and for niche industry use. Chief executive Jorge Diaz Schneider said its suppliers were rewarded with the higher margins commanded by niche battery applications compared with commodity EV battery production.
The company focuses mainly on producing proprietary ceramic anodes, and relies on partners for assembly. “We are not going to make a gigafactory,” he told the FT. “We don’t want to become another Northvolt.”
One European start-up said using parts of the Chinese supply chain allowed it to move far faster than would be possible in Europe, where government permitting and skilled labour remained major constraints.
The San Diego-based Unigrid, a start-up developing sodium-ion batteries for energy storage, said it was operating a “foundry model”, using six factories in China, South Korea and Japan to make components.
“Working with foundries is a way for us to get products out at scale,” said its chief executive Darren H.S. Tan, describing the spare capacity they offered as “a blessing for many start-ups like us”.
Dealing with multiple factories was “a logistical nightmare”, he added, but also important because “not a single partner knows the entire process”.
Analysts warn that relying on Chinese manufacturing risked both intellectual property leakage and deeper dependence on its supply chains.
Chinese battery makers were at the same time “aggressively trying to expand overseas to sell batteries and help improve utilisation of their plants,” said Yayoi Sekine, of BloombergNEF.
The aggressive build-out of cheap battery manufacturing capacity in China “upends the economic models of innovative global competitors”, according to Rick Luebbe, chief executive of battery materials company Group14.
The western outsourcing could entrench China’s control of critical supply chains, he said. “The battery sector is experiencing this playbook in real time, particularly in Europe, where EV automakers are turning to Chinese suppliers while their own domestic manufacturing base contracts.”
Max Reid, head of batteries at consultancy CRU, said the Asian supply chain remained integral for battery making, which was why European gigafactories typically depended on Chinese electrodes.
The “manufacturing excellence and knowhow” available in the region was also increasingly scarce in Europe, he noted.
While using third-party manufacturing made scaling up more manageable and less risky than Northvolt’s attempt to do everything at once, it also entrenched the lack of domestic manufacturing expertise that is “a real problem for the industry in Europe”, said Reid.
