Charging ahead – EU seeks competitiveness jolt in global battery market – Euractiv
Europe needs to ‘promote, protect, and partner’ if it’s to become a competitive battery player globally. Is EIB and InvestEU funding enough?
This article is part of our special report Raw materials, meeting Europe’s strategic needs.
China’s dominance in raw materials, costs, and manufacturing threatens Europe’s battery industry. Without stronger policies, streamlined regulations, and innovation support, Europe risks losing competitiveness in the global battery race.
In response, the European Commission and the European Investment Bank (EIB) have partnered to bolster the EU’s battery manufacturing sector with €3 billion in public support.
This includes a €200 million top-up to the InvestEU programme funded by the EU Innovation Fund, alongside €1 billion in grants for battery cell manufacturing projects for electric vehicles (EVs).
The additional funding aims to address financing gaps across the battery manufacturing value chain, focusing on advanced materials, components, and recycling while excluding mining and extraction.
The initiative seeks to advance Europe’s clean energy transition and climate neutrality goals by attracting private investment and establishing resilient supply chains.
However, recent events, such as Northvolt’s near-bankruptcy, have underscored structural weaknesses in the European battery industry. These include dependency on China for components, declining EV demand in the EU, and rising EV costs.
The steeplechase
The path to self-sufficiency for Europe’s battery supply chain is one of many hurdles, as its competitiveness walks on thin ice, unlike China or the United States, which are attracting battery manufacturers with clear incentives and lower costs.
Europe still grapples with bureaucratic hurdles, inconsistent regulations, and insufficient financial support. These challenges have led to bankruptcies among new entrants and deterred investments.
Additionally, Europe’s dependence on imported critical raw materials remains a significant vulnerability. Efforts to mine and develop these materials are hampered by environmental concerns, public opposition, and lengthy permitting processes.
Technological shifts also add complexity.
While European factories primarily produce nickel-manganese-cobalt (NMC) batteries, demand is shifting to lithium-iron-phosphate (LFP) batteries due to their lower cost and safety benefits.
Winning the ‘battery wars’
To secure its position in the ‘battery wars’, the EU must act decisively, balancing industrial competitiveness, technological leadership, and strategic autonomy.
Recommendations from the European Council on Foreign Relations (ECFR) emphasise reducing reliance on Chinese components through partnerships with global allies and promoting local production with sustainability in mind.
The ECFR also advocates supporting emerging technologies like solid-state batteries and implementing trade protections to counter unfair practices.
The European Parliamentary Research Service (EPRS) echoes these sentiments, linking the future of Europe’s EV industry to its economic security strategy of “3Ps”: promote, protect, and partner.
The EU could boost domestic EV production through a ‘Clean Industrial Act’ or similar initiatives offering subsidies tied to local manufacturing. It could encourage Chinese and foreign producers to invest in Europe, adhering to local content and technology-sharing requirements.
The bloc can shield European EV manufacturers from unfair practices using anti-subsidy tariffs, foreign subsidies regulation, and cybersecurity measures. It can make sure Chinese investments bolster European ecosystems without increasing vulnerabilities.
Strengthening alliances with countries like the US, Japan, India, and South Korea is also crucial. Free trade agreements and multilateral initiatives can attract foreign expertise and investment while promoting shared economic security goals.
By balancing these pillars, Europe can foster a competitive, self-sufficient EV ecosystem while safeguarding its industrial base and technological edge.
Handling black mass
A robust battery recycling industry is essential for Europe’s strategic autonomy in critical raw materials. Despite its importance for decarbonisation and sustainability, Europe’s recycling efforts face significant challenges.
Limited post-treatment capacities, reliance on exports of black mass (battery recycling output) to Asia, and a lack of accurate data on recycling operations hinder progress.
To address these issues, the French Institute of International Relations (Ifri) recommends several measures. Establishing a centralised database on black mass flows and recycling capacities would improve transparency and coordination.
Prioritising European facilities for black mass processing and supporting the local production of pre-active and cathode-active materials would strengthen supply chains.
Additionally, the EU must enhance business models by introducing recycling fees, incentivising recyclability in battery design, and creating a European trading scheme for critical raw materials.
Investments in advanced recycling technologies and scalable industrial applications of innovations are also critical to achieving these goals.
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Charging ahead – EU seeks competitiveness jolt in global battery market – Euractiv, source
