China is constructing a battery supply chain for Europe in Morocco, as the continent struggles to develop its own industry to support electric vehicle manufacturing, according to PowerCo’s operations head.

“We don’t have any supply chain. This has to be set up,” stated Sebastian Wolf, chief operating officer for Volkswagen AG’s battery unit, at an event in Stuttgart on Tuesday. “Right now, we have to be honest that the set-up of the LFP supply chain is happening in Morocco and not in Europe.”

 

China maintains a stronghold on global battery manufacturing, as well as on the essential raw materials like lithium, nickel, and cobalt. While Europe is attempting to establish its own supply chain, it lags years behind in technology. Concurrently, the region is losing investment to the US and Canada, where government financial incentives are more aggressive.

Lithium iron phosphate batteries are rapidly gaining popularity as a more affordable technology that has become more efficient in recent years. China can produce LFP batteries at nearly half the global average cost, according to BloombergNEF.

Morocco is abundant in phosphate resources, crucial for making LFP cells. The country is strategically located near Europe and enjoys unrestricted trade with the US.

Last year, CNGR Advanced Material Co., a Chinese manufacturer of battery components, announced a partnership with African private investment fund Al Mada to build an industrial base in Morocco. With a total investment exceeding $2 billion, they plan to begin production of battery materials at a new site in Jorf Lasfar, on Morocco’s Atlantic coast, by 2025.

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