He’s already built one of Europe’s biggest tech companies. Now Daniel Ek, the founder of Swedish music streaming giant Spotify, is helping kick-start a different kind of business.
In the forests of Swedish Lapland, not too far from the Arctic Circle, a cluster of cranes and trucks are busy assembling what is set to become Europe’s biggest gigafactory: a giant industrial project known as Northvolt that will manufacture enough lithium-ion batteries to power 600,000 electric cars per year.
Bankrolled by Ek, a billionaire, as well as Volkswagen, Goldman Sachs and a string of other blue-chip investors, the plant at Skelleftea, which already employs 800 people, is due to enter production in 2021. It is one of the most visible symbols yet of Europe’s electric vehicle (EV) revolution – but this is only the start.
They may have been late to the EV party but Europe’s carmakers are racing to catch up with established rivals in China and the US, where the charge is being led by industry giant Tesla.
Currently, only 3pc of global lithium-ion battery manufacturing capacity is located in Europe. That figure is about to surge. Fuelled by billions of dollars worth of investment and strict government rules designed to phase out petrol and diesel car sales by 2030 in Sweden and 2025 in Finland, Scandinavia is taking an early lead in Europe’s push to build an alternative supply chain.
Skelleftea is not the only project in Europe’s far north. A few hundred miles across the Gulf of Bothnia, BASF, the German chemicals titan, is building another giant battery materials project at Harjavalta in Finland – one of the few European countries blessed with large deposits of nickel, cobalt and other essential raw materials.
In Germany, others are planned at Schwarzheide, Kaiserslautern and Salzgitter to feed the country’s car industry, which churns out over a quarter of the EU’s 19m vehicles per year.
Tesla, of course, is building a new plant in Berlin. Britain, too, has ambitions to become a leader in Europe’s EV supply chain – but it will need to act swiftly and with real conviction if it wants to catch up. There is a lot to play for. In fact, many believe the very survival of the UK car industry is at stake.
To be clear, the UK has plenty going for it, including a domestic supply of lithium in Cornwall and an established car industry with a highly skilled labour force. Vale’s Clydach nickel refinery near Swansea in Wales, which has been operating since 1902, is one of Europe’s biggest manufacturers of some of the essential raw materials.
Moreover, the UK has deep and long-standing expertise in the science of developing advanced batteries. The technology behind the lithium-ion battery on which electric cars, smartphones and so many other modern devices now rely was developed at Oxford University in the Seventies.
A clear plan also exists to build the type of facility needed to produce batteries for the UK car industry. Britishvolt, a £1.2bn project to build a gigafactory nearly twice as big as Northvolt’s plant at Skelleftea, is moving forwards – but it remains three years behind and faces some critical challenges.
Above all the project urgently needs more government support and clarity over state aid rules if it wants to avoid missing the boat. Sweden’s Northvolt has been earmarked an Important Project of Common European Interest (IPCEI) – an EU scheme that allows it to bypass European state aid rules to receive lashings of government support. That includes a €443m (£402m) loan guarantee from the government of Germany and a €350m loan from the European Investment Bank.
Since the UK is not a member of the seven-nation IPCEI scheme and is in any case leaving the EU, right now, Britishvolt cannot hope to qualify for similar levels of support, without which it will be tough for it to compete. In fact, under existing rules, Britishvolt would only be allowed to secure less than £40m in equivalent government support.
This is a critical issue the UK needs to address to protect the long-term fortunes of Britain’s car industry, which employs 823,000 people and accounts for 14pc of exports, with turnover of £82bn.
Certainly, practical support for a British gigafactory would be far more useful for the UK’s long-term economic prospects than the vague promises about retraining workers offered up by Boris Johnson this week as a remedy for rising levels of joblessness caused by the pandemic.
As JLR boss Ralf Speth has put it: “If batteries go out of the UK, then automotive production will go out of the UK.” And once it’s gone, it will be extremely difficult to get it back.