The changing needs of the supply chain means the development a key battery gigafactory project in Italy is evolving, says Lars Carlstrom, CEO of Italvolt.
Italvolt is starting to build a gigafactory for silicon batteries for electric vehicles in Europe on the old Olivetti site in northern Italy.
Now the site aims to include materials factories and possibly even processing of lithium to avoid the same supply chain problems that have hit the semiconductor industry over the last two years.
The site in Piedmont will be a major industrial centre, producing up to 50GWh of lithium ion battery cells with renewable and even nuclear energy and employing up to 10,000 people in the local supply chain, says Carlstrom. This has been a powerful argument with the local government in Italy, although the political instability is an issue, he says.
“Things have changed in the last year,” says Carlstrom. “The market has realised the need for battery cells is massive and they don’t see it as a risk anymore. Now it’s about the minerals and the supply chain and that was what accelerated the venture.”
“I see it as a massive opportunity for Italy to change its destiny and not be stuck in the old way of thinking,” he said.
“We have submitted the first phase in late August and Phase One in October so hopefully we will have building permits in Spring 2023,” he said. “We are furnishing a lot of detail for the authorities. Compared to the UK with Britishvolt, that took 93 days so it’s a huge difference even if you try to simplify it as much as possible,” he said.
The site has an emotional connection in Italy, having been the manufacturing plant for electronics giant Olivetti.
“As it is a brownfield project it makes it easier to get the permits. We will demolish 95% of the buildings, we are keeping two for the canteen and a small museum, that’s the agreement,” he said. “A gigafactory is very complex and difficult to engineer so you can’t use old buildings. Fires and explosions can take place so the buildings have to be engineered for this, so its probably ten times more expensive than other buildings and not many of these have been built in the world.”
He has already signed up leading European engineering firms for the project, from constructing the buildings to designing the production flow and installing the equipment.
“AECOM is part of the engineering project with Equants, part of Energie is doing dry rooms and AVL supported by ABB for electrification and connection to the grid and for automation and robots for the factory,” he said. TÜV SÜD has been signed up for control and certification of production processes and American Manganese for recycling of lithium ion batteries.
“It’s quite low margins in cell manufacturing so you need scale and the supply chain and having it close to the factory the companies need incentives to build their factory nearby,” he said. “Therefore a gigafactory is a key part of the supply chain, that’s the reason why you can’t have smaller factories Perhaps with higher performance batteries with larger margins for customers such as Maserati for example perhaps that could be a play.
“But if you are going to make the supply chain work and attract suppliers that needs substantial volume. We have eight production lines and each of those is 6GW so we have the opportunity to produce different technologies.”
“We will shortly announce a joint venture with technology for high performance and fast charging so there we will easily support Ferrari and Maserati if they are interested. When we are in production in 2025 and up to scale in 2027 and 2028 all batteries will the fast charging at least and be high performance to charge in five or six minutes the same as filling your car with gas.”
The war in Ukraine with record prices for liquid gas for electricity is a key issue, as Italvolt will be a major user of energy in Italy. 40% of all gas in Italy is Russian gas, says Carlstrom.
“The energy crisis for Europe is a problem, we need to find more cheap green energy, thermal, solar,” he said. “We are looking at small modular reactors underground so that’s very promising as we cannot have it as we have it now. The factory itself will consume 1% of all energy in Italy which is huge.”
“Italy is one of the leading thermal energy locations but the legislation is not favourable so that’s something we need to put pressure on the authorities,” he said. “It could be like Iceland, it’s a shame they haven’t addressed this sooner and taken this opportunity but it will happen
The factory will make MNC (nickel, manganese, cobalt) lithium ion battery cells with silicon anodes for car makers to assemble into packs. This requires close cooperation with customers.
“We are not going to make battery packs yet, we are only focussing on cells,” said Carlstrom. “The battery is the platform of the car and that has to be engineered by the car maker. To make all this happen it has to be a collaboration between cell manufacturer, car makers and the supply chain.”
At full production the factory will be able to produce cells for 550,000 cars but Europe produces 18m cars a year. “This means many millions of batteries need to be produced and that’s the same for all the other battery gigafactory initiatives, they will not be up to scale until 2030 so that will create issues similar to the semiconductor crisis we see now. It’s going to be tough for the car makers to source batteries so we are in a favourable position,” he said.
Carlstrom points to the $4bn StateVolt project in California that aims to produce enough lithium for 54GWh of batteries.
“Statevolt launched in April sourcing green lithium from CTR (Controlled Thermal Resources and we are in current talks with cathode manufacturers but the basic idea is to have someone to co-locate [at ItalVolt] for refining locally. That’s the intention, we will see how far we can get. They need to be convinced that we are a customer they can count on so when they see the factory being built that will give them confidence. But the European supply chain of minerals is almost non-existent.”
Another key material is for the anode.
“Silicon anodes – we are exactly on that technology, and we want to have the entire ecosystem as close as possible to the gigafactory. We will employ 2500 to 3000 people but the initiative itself will secure at least 10000 jobs in the area and that’s what we are mapping in the area,” he said. “
“That’s massive and necessary as the transition from the internal combustion engine (ICE) to electric vehicles will cause unemployment as Italy is strong in ICE and companies will lay off a lot of people. That’s an advantage for us as it gives us access to a skilled workforce so we need to accelerate the process and recreate the supply chain.”
However the increased size of the venture naturally raises questions around the funding. That’s one of the key differences in the last year, with funds understanding both the need for battery cells and the importance of the supply chain and sourcing minerals.
“This was the crucial thing and we have a number of ways of funding,” said Carlstrom. “The real estate is one opportunity and there are a lot of funds available for such an initiative. We have had to explain to the market where we will get €3.5bn but governments and private equity are fuelling a lot of money into these ventures. It’s a huge amount of money but in the downturn it is probably one of the areas that is still being funded.”
“We have some issues with the government crisis [in Italy] so we will see in September but we have support from the government so far. We also need to wait for the new government in September.”
Competitors such as NorthVolt have received significant backing from the European Investment Bank (EIB), investment funds and private equity funds. “We were liaising with them last year but now we are launching the technology we are intensifying the discussions,” he said. “Private equity is also a very important part and this autumn we are heading into that phase so we are talking to a number of opportunities that are very interesting.”
Then it will be up to customers to fund specific technology requirements. “Funding through contracts will be late next year with bank funding for operating costs.”
While car maker Stellantis is the obvious choice for a customer with its Italian business of Fiat, Lancia and Alfa Romeo as well as Vauxhall, Opel, Citroen and Peugeot, this may be an issue as sites consolidate and close.
“We can see Stellantis will close a lot of activities in Italy but still with the location we are close to France and Germany so we are in a very good location, so we can support both Stellantis and a number of other manufacturers,” he said.
The aim is to float the company on the US stock market.
“We are very keen to support localisation so its Italy first and then Europe but the opportunity for big money is not in Europe but in America,” he said. “The IPO market is also probably New York and not Europe for the possible exit and the value acceleration. In the US you can essentially borrow the complete equity from the Department of Energy to catch up , they are funnelling huge amounts into industry.
Future battery technology
While the initial focus is on NMC lithium ion cells with silicon anodes, the company will be able to produce other technologies, initially for storage batteries. “You can build factories for those in three to five years’ time,” he said.
Then there is solid state battery technology which is already emerging in a vehicle design by Nio in China. “Now its happening so we are trying to future proof as much as possible with new machinery and consider solid state technology. But the transition is costly for OEMs. Battery technology will change every third year so the vehicle platform needs to change every third year so that will need higher collaboration between OEMs with platform sharing so it will ridiculously expensive to replace a platform every three years.”
It is also working with the Politecnio di Milan on new battery technologies and recycling.
“That means we will also need to implement new production in the gigafactory so you need to engineer the factory in the proper way from the beginning,” he said.
All these supply chain and electrification trends are driving the design and development of the site. With €3.5bn to raise at the start of a global recession, Carlstrom is confident that those trends will work in his favour over the next couple of years.
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
The technical storage or access that is used exclusively for statistical purposes.The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.