Are car makers going to save the world?
In my neighbourhood, there are a few things that arouse passions of the locals: bike thefts, planning applications, student house parties that don’t follow social distance rules. All of these will set the residents’ WhatsApp group on fire.
But nothing gets the pitchfork-wielding online warriors going like cars.
For one side they’re the scourge of the city. They're driven too fast, parked in the wrong places, pump out pollution, and put everyone else in danger.
For the other side they’re a vital tool that should dominate the roads, and any attempt to stop their free progress is met with huge resistance. We Brits often say we don’t understand why US Republicans fear Democrats taking their guns, but some of our countryfolk see cars in the same way: a God-given right for all red-blooded Brits. Hands off the hatchbacks!
But the schism between these groups may yet be bridged.
Over the last week, we’ve seen four stories that show how more car makers are moving into electric vehicles and battery production. We expect some to use this as a starting point to expand into producing larger systems too.
Last week, French car maker Groupe PSA – which owns the Citroen, Peugeot and Vauxhall brands – officially formed their joint venture Automotive Cells Company with Total to produce electric vehicle batteries from 2023.
This is interesting because French oil giant Total has already made significant moves in the utility-scale battery industry. It bought battery maker Saft for $1.1bn in 2016, and is currently building a 25MWh battery-based storage project at the Flandres Center in Dunkirk’s port district.
Automotive Cells Company plans to focus purely on making batteries for electric vehicles now, but via Total it has a link to the utility-scale camp.
Then there’s QuantumScape, which is the battery firm backed by Volkswagen that last Thursday revealed it would go public through a reverse merger with Kensington Capital reflecting an enterprise value of $3.3bn.
The company will start making solid-state battery cells for Volkswagen vehicles in 2024, and may expand to other vehicle makers too. There’s no clear link to the utility-scale sector at present – but we would expect the company to seize other opportunities that might arise.
Yesterday, electric vehicles start-up Lucid Motors unveiled its electric sedan Lucid Air, and plans to expand into utility-scale and residential batteries too. There's a parallel with Tesla, which also straddles these two markets.
And finally, General Motors this week took an 11% stake in electric vehicles maker Nikola and committed to co-develop a fully-electric-and-hydrogen pick-up truck, the Nikola Badger. GM’s appetite for renewable power is well-known thanks to the high-profile work of Rob Threlkeld, and a move into utility-scale storage wouldn’t look odd. Four stories. Lots to unpick.
Why does it matter?
We all know that storage can play a key role in supporting more renewables on the grid, and we are seeing the costs of lithium-ion batteries fall sharply. It’s a trend we covered last week. The growing involvement of car giants in storage can only bring in expertise and financial clout to drive down technology costs.
Higher levels of investment in electric vehicles should also increase electricity demand, which again bodes well for renewables. The combined battery storage capacity of EVs should help with grid balancing too.
We expect some car makers to follow Tesla into residential and utility-scale battery storage, but the renewables industry can benefit even if they don’t.
For example, a study from Massachusetts Institute of Technology in May said used electric vehicle batteries could be combined and used as utility-scale batteries when they don’t hold enough charge to operate in vehicles. MIT said this would be a new lease of life for batteries that have degraded to 80% of their original capacity – and could be installed at 60% of the original cost.
So back to the original question. Are car makers going to save the world?
Frankly, no. Replacing fossil fuel vehicles with electric can't fix every issue with cars, and rolling out batteries will cause extra challenges with raw materials. But it’s an unfair question. No group can save the world on its own!
However, more investment by car makers in storage systems will help further commercialise the technology, and can support renewables whether it happens at a utility, home or vehicle scale.
The bottom line
More car makers are increasing their positions in storage, and we expect some to target growth in utility-scale systems as well as EVs. Watch this space.