What a grim day for the Europe’s EV supply chain. The region’s leading battery-materials maker, Umicore, booked a EU1.6b writedown and a strategic review of its struggling cathodes business, while BASF said it’s pausing some investments due to slower EV penetration.
CEO Bart Sap, who took over at Umicore on May 16, sees “tough decisions” ahead. Nothing is being ruled out, including partnerships and other options that could “trigger value.” The battery business will remain at break-even point or loss-making at the EBIT level in 2025 and 2026.
But for the time being, no drastic actions like footprint optimization, divestments or shutting Umicore’s under-utilized NMC plant in China which accounted for a lot of the writedown. Paring back investment is enough for now. Spending on the cathodes project in Canada, a tricky situation given the financial support from government authorities there. Plans for a large-scale European battery recycling plant is pushed out to 2032 at the earliest.
Umicore believes that the cheaper LFP-based cathodes used in China for about-town cars won’t bring be the demise of its NMC-based chemistry geared toward premium, long-distance EV rides. That Asian CAM companies are eyeing the European market vindicates Umicore’s strategic standing in Europe, according to Sap.
But LFP is developing and improving rapidly. And there’s a slew of other technologies coming through.
Gone is the build-it-and-they-will-come philosophy. BASF also feel’s the need to adapt and “de-risk” its battery business.
“Right now, we’re taking a more cautious approach,” said Kamieth.
The German company will continue to ramp up existing facilities, but any further spending on capacity will only go ahead when there are firm customers in place. The world’s largest chemical company has paused plans for a large-scale battery-materials refining plant in Tarragona.
BASF’s battery materials isn’t a “huge part” of the Capex budget, CEO Markus Kamieth said on a call. But given its EU19.5 billion investment plan for the 2024-2027 period, it’s unlikely to be small-fry either.
Europe’s EV market will have to wait until early 2025 for the results of Umicore’s strategic review.