LONDON/BERLIN -- Europe's drive to build a homegrown electric vehicle battery industry is hitting roadblocks as investors shy away from giving startups sufficient funding to challenge the Asian companies that dominate the market.
With the notable exception of Sweden's Northvolt, some startups hoping to build so-called gigafactories to compete with the Asian behemoths are going for smaller plants, with the aim of attracting more investment further down the line.
Britishvolt is just one of the startups with grand ambitions to run into trouble. It wants 3.8 billion pounds ($4.4 billion) to build a gigafactory in northern England but its plans are hanging by a thread as it struggles to lure enough investment.
Unlike Northvolt, which formed a joint venture with Volkswagen Group in 2019 and struck a long-term supply deal with BMW in 2020 and with Volvo in 2021, Britishvolt has yet to sign any major customers or test its technology on a commercial scale.
"Nobody will give you an order on the strength of a PowerPoint," said David Roberts, who has invested in several British companies to focus on zero-emission cars.
"You are looking at six years before you have real sales, so where the hell do you get $5 billion plus operating costs without an order?"
That is why a number of European startups are taking the slower route, building smaller, cheaper plants with a capacity below 1 gigawatt-hour (GWh) -- dubbed "megafactories" -- to produce cells at scale and then win contracts from automakers.
But even Northvolt is not immune to current market conditions. The company said last month that it may delay its battery planned factory in northern Germany, citing a sharp rise in energy prices as part of the reason for the possible delay.
The company said in March that it had signed a memorandum of understanding with Schleswig-Holstein state and the Heide region for the development of the factory, and that it expected it to produce its first batteries in late 2025.
French battery startup Verkor announced last week that it had raised 250 million euros ($249 million) to fund a megafactory.
CEO Benoit Lemaignan described it as a "baby step," before the company embarks on raising funds for a 1.6 billion euro 16 GWh gigafactory that should open in 2025 and will supply Renault.