Market-driven decisions: Statevolt pivots from EV Batteries to Energy Storage Solutions, and from the US and Europe, to UAE

In May of this year, AMS reported that energy company Statevolt had made the decision to build a gigafactory in the UAE as opposed to its initial European ambitions. CEO, Lars Carlstrom, says that the region offers a more favourable environment for the company’s gigafactory plans due to several factors such as government and regulatory support, lower energy, land and labour costs, and its strategic location rendering it a more attractive option as compared to Europe.

Now, Statevolt has announced that it is officially putting its US plans on hold to further focus on the UAE project. In this latest interview with AMS, Carlstrom casts light on the company’s major decision to pivot in this direction, and explains why he thinks that this, despite popular opinion, is in fact the logical decision, and why it will bear fruit in the future.

Hi Lars. Statevolt is currently pausing its US plans to go all-in on the UAE region. What factors led you to make this decision?  

Yes, we have decided to temporarily put our US project on hold. Over the past 12 months, the transition in the EV space has faced significant challenges, particularly due to the sector’s immaturity for a full-scale rollout.

Several key factors have influenced this decision:

Infrastructure and Supply Chain Issues: The infrastructure and supply chain in the US are not yet fully developed and would require time and strong policies from authorities. In the meantime, collaboration with countries that have access to fully developed supply chains, such as China, would be necessary to hit the 2035 target. However, this was not possible due to geopolitical issues.

Financial Market Downturn: The financial downturn has led to tighter capital markets, making it more challenging to secure the necessary funding. While the IRA provides great incentives, it does not cover the full amount needed, making reliance on private investments crucial.

Given these conditions, we have adapted our plans to focus on regions where we can make a more immediate impact. Additionally, we have amended our solutions strategy to focus on Energy Storage Systems (ESS). The demand for ESS is massive, especially in our home region, the Gulf States. We also see significant market potential in India and Africa.

The UAE offers a conducive environment for our project with its minimal bureaucracy, low or non-existent taxes, and lack of geopolitical issues. We believe it is the ideal location to build a serious gigafactory outside of China. We remain committed to our US plans and will revisit them once the conditions are more favourable.

It seems that Statevolt is now decidedly focusing - not on EV batteries - but energy storage. Could you tell us about the thinking behind this? What trends are you seeing that prompt you to move in this direction?

After a thorough analysis, we see a necessity to support green industrialisation while enhancing grid stability. Therefore, we are focusing on Energy Storage Systems (ESS) solutions for both businesses and households. Our business solutions will include battery parks, while our household solutions will feature power walls. Additionally, we have updated our technological approach by adopting a semi-solid solution under licence. This technology offers several advantages, including improved safety, longer lifespan, and higher energy density.

Our strategic shift is driven by several additional factors and emerging trends:

Market Demand: The demand for ESS is growing rapidly, driven by the need for reliable and efficient energy storage solutions to support renewable energy sources. This is particularly critical in regions with high renewable energy penetration.

Diverse Applications: Unlike EV batteries, which are primarily used in vehicles, ESS has a wide range of applications, including residential, commercial, and industrial energy storage. This diversification allows us to tap into multiple markets and reduce dependency on a single sector.

Technological Advancements: Advances in battery technology are making ESS more efficient, cost-effective, and scalable. These improvements are enabling us to offer superior solutions to our customers.

We believe that focusing on ESS will allow us to make a significant impact in supporting the transition to renewable energy and enhancing grid stability.

What would you say is lacking in the USA and Europe in terms of electrification?

I can outline several significant factors regarding electrification in the USA and Europe:

Infrastructure Development: Both the USA and Europe are investing in electrification infrastructure, but the pace and scale of development vary significantly. In many areas, the existing grid infrastructure is outdated and requires substantial upgrades to support widespread electrification, including EV charging stations and renewable energy integration.

Market Dynamics: The market for renewable energy solutions is growing rapidly, but there are still challenges related to consumer adoption, supply chain constraints, and the availability of raw materials.

Economic Impact: Electrification represents an amazing potential to create new economic opportunities, including job creation in renewable energy. However, it also requires significant investment and can pose temporary challenges for industries and workers transitioning from traditional energy sources.

Recycling: While electrification is a key strategy, it is important to consider the entire lifecycle of electric technologies, including the sourcing of raw materials and the disposal of batteries.

If I may speak about an industry close to my heart, the automotive sector, we clearly see that Europe, particularly its industrial driver, Germany, is in serious decline. This situation could have severe repercussions for the entire continent, potentially putting millions of industrial jobs at risk and leading to an unnecessary recession.

The mismanagement of the automotive industry by the EU is particularly concerning. In the US, it is unlikely that the country will achieve a comprehensive EV fleet within the next decade. Currently, only the west and east coasts can be compared to European standards in terms of electrification. With our venture in Imperial, the Lithium Valley in California, we are in a favourable position and hope to return to our US project soon.

Could you provide a couple of stats that you think people should be aware of? 

I would like to bring to your attention the outlook for Energy Storage Systems (ESS). Over the years, several reliable sources have downgraded their projections, but the importance of ESS is now clearer, and the numbers are recovering. ESS is expected to experience significant growth through 2033 and beyond.

The total capacity of energy storage systems worldwide is projected to exceed 1 terawatt (TW) of power and 3 terawatt-hours (TWh) of energy by 2033. This means that by 2033, the combined capacity of all energy storage systems globally will be able to store and deliver a substantial amount of energy, supporting the growing demand for renewable energy and ensuring a more stable and reliable power supply. As for the cost of energy storage technologies is expected to decrease gradually. For instance, the average cost per kilowatt-hour (kWh) is projected to drop from around $250 in 2020 to approximately $200 by 2035. These cost reductions will make energy storage more accessible and economically viable.

Read more Stories on Statevolt and Electrification:

• Statevolt’s $3.2bn UAE Gigafactory to bolster electrification in Middle East
• Why Statevolt is building a gigafactory in the UAE instead of Europe
• VW’s plant closures illustrate industry’s existential crisis
• Despite industry fears, global EV sales reach record highs

Advances in battery technology, including improvements in energy density, lifespan, and safety, will continue to drive the market forward. Innovations such as semi-solid and solid-state batteries, which we built our strategy in UAE on, are expected to play a significant role in the future of energy storage.

Overall, I see energy storage solutions to be increasingly used across various sectors, including residential, commercial, and industrial applications. This diversification will help stabilise the grid, support renewable energy sources, and provide backup power during outages.

Regarding the electric vehicle (EV) sector, I must express a more cautious outlook. I believe that internal combustion engines (ICE) may need to be extended until 2050. Both EVs and ICEs will likely remain part of the propulsion mix offered by the automotive industry. The European Union needs to reconsider its stringent regulations, as they could potentially harm our economies. Rapid policy changes are necessary to support a balanced transition.