In 2023, the European Union (EU) produced approximately 12.1 million passenger cars, marking an 11.3% increase from the previous year. (Acea auto) This growth reflects a recovery from recent supply chain disruptions and underscores the automotive sector’s resilience. The automotive industry significantly contributes to the EU’s economy, accounting for about 10% of the manufacturing sector’s real value added and slightly below 2% of the EU’s real Gross Domestic Product (GDP). (ECB) In monetary terms, the production of motor vehicles, trailers, and semi-trailers generated €773 billion in sold production value is 2023, representing 13% of the total value of sold EU production. Germany remains the largest automotive producer within the EU, contributing over 52% of the EU’s value added in the motor vehicle manufacturing sector as of 2019. (Statista) This dominance highlights Germany’s pivotal role in the European automotive landscape. The EU also maintains a robust position in the global automotive market, with a €90.6 billion surplus in new car trade in 2023, overall the sector’s performance in 2023 indicated a positive trajectory, reinforcing its critical role in the European economy. However, to confront a challenging industrial and manufacturing economic conjuncture automakers across Europe need to implement a strategic industrial production plan that will make it possible to scale up the production of EV car units with lower production costs, which can become more affordable to ordinary European drivers. As the global demand for battery storage surges, the limitations of lithium-ion technology, ranging from supply chain constraints to environmental concerns, highlight the need for alternative chemistries. Sodium-ion (Na-ion) batteries, leveraging the abundant and cost-effective nature of sodium, are emerging as a viable option, as the growing demand for Lithium-ion batteries has exposed vulnerabilities in supply chains, particularly for lithium, cobalt, and nickel. Na-ion batteries, leveraging sodium’s abundance and lower cost, offer an alternative that addresses both economic and environmental concerns.

Batteries Raw Components Natural Resources Availability

Sodium is the sixth most abundant element in Earth’s crust, with concentrations in seawater and mineral deposits significantly exceeding those of lithium. Unlike lithium, sodium extraction does not rely on limited geographic reserves or complex mining operations, reducing supply chain bottlenecks. Processing sodium into battery-grade sodium salts involves fewer steps and less energy-intensive processes compared to lithium refinement. This reduces both environmental and economic costs. The supply chains for Na-ion and Lithium-ion batteries share similarities due to the overlap in manufacturing processes. However, Na-ion batteries eliminate reliance on cobalt and allow the use of aluminium as a current collector for both electrodes, further reducing costs.

Economic Analysis of Battery Manufacturing Costs

Battery Pack Cost (50 kWh): €125/kWh × 50 kWh = €6,250, Non-battery components: €10,000, Battery assembly and integration: €500, Warranty provision: €100 Total: €16,850. Total Production Costs per Vehicle: €16,850 (direct costs) + €445/unit (allocated operating cost at 100,000 units/year) = €17,295/unit. Projected Final Selling Price, Manufacturer Price: €17,295 × 1.15 (gross margin) = €19,889, Dealer Price: €19,889 × 1.10 (dealer margin) = €21,878, Final Consumer Price: Approximately €21,900.

Comparative Analysis with Lithium-Ion Battery Cars

Assumptions: Lithium-ion battery cost: €140/kWh Vehicle range: 250 km Total production costs (non-battery): €16,500/unit

Lithium-ion Battery-Powered Vehicle Price: Battery pack cost: €140 × 50 = €7,000, Total production costs: €16,500 + €7,000 = €23,500, Final price (15% manufacturer margin, 10% dealer margin): €23,500 × 1.15 × 1.10 = €29,792

Price Differential: Savings with Na-ion: €7,892/unit (~26% cheaper). Sodium-ion car: €21,900, Lithium-ion car: €29,792.

Solving the Oversupply in European Car Production

Recent analyses indicate that approximately one-third of European automotive factories, including those of major manufacturers like BMW, Mercedes, Stellantis, Renault, and Volkswagen, are underutilized. In some facilities, production levels are below 50% of their potential capacity. For instance, Stellantis’s Mirafiori plant in Italy, which produces the electric Fiat 500e, experienced a production decline exceeding 60% in the first half of 2024. Deutsche Welle

Supply Chain Diversification: To mitigate risks associated with over-reliance on specific suppliers or regions, automakers are diversifying their supply chains. This includes sourcing critical materials like lithium and cobalt from multiple regions and investing in recycling initiatives to reclaim materials from used batteries. To reduce reliance on external suppliers and enhance competitiveness, European automakers are investing in local battery manufacturing facilities. This strategy aims to establish a robust and self-sufficient EV supply chain within Europe. Automotive Logistics The transition to EVs requires new technical skills, prompting automakers to invest in retraining programs. For example, initiatives are underway to equip workers with competencies in high-voltage systems and digital technologies essential for EV production and maintenance. Reuters. Collaborations between automakers and technology firms are facilitating the sharing of EV platforms and technologies, optimizing production processes, and reducing development costs. An example is Ford’s partnership with Volkswagen to utilize the MEB electric vehicle platform. Wikipedia. Transitioning to sodium-ion battery production presents European automakers with both opportunities and challenges. A comprehensive market analysis is essential to understand the supply and demand dynamics, annual car purchase volumes, and affordability considerations.

European Car Market Overview

New Car Registrations: In 2023, the European Union (EU) recorded approximately 10.5 million new passenger car registrations, a 14% increase from the previous year. Acea Auto Electric Vehicle (EV) Adoption: Battery electric vehicles (BEVs) accounted for 14.6% of new car sales in 2023, reflecting a 37% growth compared to 2022. Acea Auto

Affordability and Consumer Demand

Price Sensitivity: The average price of new cars has risen, making affordability a critical factor for consumers, especially in the middle-income segment. Le Monde. EV Pricing: The average price of electric cars remains high, with models like the electric Fiat 500 priced around €29,000, which may be prohibitive for many consumers. Reuters

Supply Chain Adjustments

Battery Production: Integrating sodium-ion battery production requires significant investment in retrofitting existing manufacturing plants and establishing new supply chains for raw materials. Manufacturing Capacity: Automakers need to balance production between internal combustion engine (ICE) vehicles and EVs to align with market demand and regulatory requirements.

Investment and Profitability Analysis

Initial Investment: Retrofitting 10 production plants for sodium-ion battery integration is estimated at €5 billion. Production Costs: The production cost per sodium-ion battery EV is approximately €17,295, with a selling price of €21,900, yielding a gross profit of €4,605 per vehicle.Demand Projections: Assuming an annual production capacity of 1 million vehicles across the retrofitted plants, with a 5% annual growth in demand, the cumulative profits are projected to surpass the initial investment within 2 years.

Market Dynamics

Competition: European automakers face increasing competition from Asian manufacturers offering more affordable EVs, necessitating strategic pricing and product offerings. (Reuters) Policy Environment: Government incentives and subsidies play a crucial role in EV adoption rates. Changes in these policies can significantly impact consumer demand. AP News.

Affordable EV Models: Develop and market affordable sodium-ion battery EVs to cater to the price-sensitive segment, potentially targeting a price point of around €25,000. Trasporti e Ambiente. Infrastructure Investment: Collaborate with stakeholders to enhance charging infrastructure, addressing one of the main barriers to EV adoption. AP News. Consumer Education: Implement campaigns to inform consumers about the benefits and affordability of sodium-ion battery EVs, aiming to shift perceptions and increase adoption rates. While integrating sodium-ion battery production lines requires substantial initial investment, the growing demand for affordable EVs and supportive policy environments present a viable path to profitability. Strategic planning and execution are essential to capitalize on these opportunities and achieve a successful transition.

Investment Analysis and Recovery for Sodium-Ion Battery EV Production

The total cost of retrofitting 10 production plants for sodium-ion battery cars is €5 billion, while the cumulative profits surpass the initial investment within 2 years of operation, assuming steady demand growth and cost-efficiency gains. Implementing the correct industrial strategy can lead to a series of positive outcomes for the whole automaker industry and the wider economy: Economic Growth: Reduce production costs by 15-20% through localized supply chains and sodium-ion battery integration. Increase exports of EVs and battery technologies, bolstering trade balances. Environmental Benefits: Decrease CO₂ emissions from ICE production and vehicle use by 40% by 2035, Establish Europe as a leader in sustainable automotive manufacturing. Employment Sustainability: Retain 90% of the workforce currently employed in the automotive sector by providing new opportunities in EV production. Global Leadership: Position Europe as a hub for next-generation battery technologies, reducing dependence on Asian imports.