Elisabeth Braw is a senior fellow at the Atlantic Council, the author of the award-winning “Goodbye Globalization” and a regular columnist for POLITICO.
If there’s one thing we know, it’s that our transition away from fossil fuels won’t be possible without electric cars (EVs).
Pulling ahead in this field, China has recently been making EVs that are far cheaper than Western-manufactured ones, and much of it comes down to one humble yet indispensable component: the battery. But now, thanks to one small town in Norway, it seems there might yet be hope for Europe, and for a greener future without risky dependencies on China.
Oh, how the times have changed. Four years ago, Tesla was the world’s largest all-electric car brand, followed by China’s state-owned SAIC, Volkswagen, Renault-Nissan-Mitsubishi and BYD ( another Chinese manufacturer). Today, five of the world’s 10 biggest EV brands are Chinese — and it’s not because buyers specifically want Chinese cars. It’s simply because they’re cheaper.
Take, for example, BYD’s Dolphin Surf. Available in Europe as of this summer, these cars start at €22,900. That’s significantly less than Tesla models — and a couple other Chinese EVs are cheaper still.
One reason for all this is that their batteries — that all-important part of an EV — cost less. For the past few years, Chinese makers have been switching to so-called LFP batteries, which are different from the NMC batteries most Western cars still use. LFP stands for lithium iron phosphate, and batteries made with these components aren’t just cheaper but last longer, thus making them more sustainable too. (NMCs still get more usage out of each charge, which makes them better for longer drives, but that gap is narrowing.)
Given their focus on price, it’s not surprising Chinese brands have so massively adopted LFP batteries. “[China has] a huge cost advantage through economies of scale and battery technology. European manufacturers have fallen well behind,” David Bailey, a professor of business and economics at Birmingham Business School told the BBC. “Unless they wake up very quickly and catch up, they could be wiped out.”
But there’s good news for Western EV makers: a renewable-energy company called Å Energi — a Norwegian hydropower giant — has been thinking ahead precisely along these lines.
Four years ago, Å Energi teamed up with ABB, Siemens, the Danish pension fund PKA and the Norwegian investment firm Nysnø to form Morrow Batteries. Majority-owned by Å Energi, Morrow is based in the picturesque town of Arendal on Norway’s south coast, and it recently began producing LFP batteries for energy storage systems — think sun and wind energy that needs to be stored after being captured in solar panels and wind turbines — as well as for defense equipment.
If all goes according to plan, Morrow will then expand to vehicles, with plans to build another three LFP facilities in Arendal before 2029.
Of course, this company won’t be able to match China’s formidable LFP production on its own — and yet, it exists. It exists because Å Energi dared to commit to this new technology, because the Norwegian government agreed to grant a loan, and because the EU decided to support the undertaking too.
To date, the path to EV batteries has been strewn with grand ambition and, alas, bankruptcies. In the past couple years alone, Northvolt in Sweden and Britishvolt in the U.K. have both gone bust. But as technical as it may sound, LFP batteries are the surest way for Europe to reduce its dependence on Chinese EVs. So, if Morrow succeeds, and is perhaps joined by one or two new European battery-makers, Europe’s EV manufacturers will be better able to compete with Chinese rivals. To be viable, the green transition has to be a collective undertaking.
It’s no surprise that this pioneering LFP factory is located in Norway, as the country has made EV adoption a priority. In 2023, nine in 10 cars sold in the country were already EVs, and the Norwegian government wants all newly sold cars to be zero-emission by the end of this year. Norway doesn’t have any significant car manufacturers, and unlike most battery-makers, Morrow isn’t owned by a car manufacturer. But LFP batteries look certain to be the future in all kinds of applications — and Norway is grabbing that opportunity.
Morrow’s factory, or factories, may lose money at first, but in the long run, they’ll be a benefit to their owners and to Norway — not to mention Western consumers. Even more crucially, the arrival of a battery factory in Arendal points to a fundamental reality: that to do the right thing for our supply chains and, in many cases, the climate, companies need to team up with unexpected partners, and occasionally with the government too.
In today’s climate, so to speak, business plans can no longer solely focus on immediate profit.
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