Europe’s race to build a sustainable battery supply chain

Key Findings of the Report

The report highlights significant potential for Europe to become self-sufficient in battery production by 2026. However, it also identifies that over half of the gigafactory plans in Europe are at risk of being delayed or cancelled. This is a slight improvement from the previous year, where nearly two-thirds of plans were at risk.

Self-Sufficiency and Climate Benefits Europe has the potential to manufacture most of its demand for key components such as cathodes and materials like lithium by 2030. Onshoring the battery supply chain could lead to a 37% reduction in carbon emissions when using the EU grid, with potential reductions doubling to 62% if relying on predominantly renewable energy sources.

Risks and Uncertainties Despite the progress, many announced projects remain uncertain. Stronger government action is required to ensure these plans materialise, particularly in a fiercely competitive global market. The report stresses the need for maintaining investment certainty, providing EU-level investment support, and implementing stronger ‘Made in EU’ provisions.

Planned Battery Cell Capacities in Europe

Europe’s battery cell capacity is set to grow significantly by 2030, with 54 gigafactories announced across the continent. These include new projects such as Prologium in France, TATA Group in the UK, and Finnish Minerals Group, among others. The estimated capacity from these projects totals around 1,725 GWh, sufficient to power 13.6 million electric cars.

Recent Developments Since T&E’s last assessment, several projects have progressed. ACC in France and Inobat in Slovakia have commenced production, while Northvolt has begun constructing its second battery cell production plant in Germany. However, some projects, such as those by Freyr and Volkswagen’s PowerCo, have been downgraded or delayed.

Geographical Distribution France, Germany, and Hungary have made the most progress in securing battery cell production capacity. In contrast, Finland, the UK, Norway, and Spain have higher shares of capacity at risk.

Midstream Challenges

The report also identifies significant gaps in the development of cathode active materials and precursors. While some commercial production has started, such as by Umicore in Poland and BASF in Germany, many announced projects are still in early stages and face uncertainty.

Raw Materials and Recycling

Europe’s potential to achieve self-sufficiency in battery minerals like lithium and nickel is promising, with several refining projects in the pipeline. However, many of these projects are still developing, and Europe remains dependent on global supply chains. The report underscores the importance of scaling up recycling capacities to reduce reliance on virgin materials and support a circular economy.

Policy Recommendations

To secure its position in the global battery market, the report recommends:

• Maintaining ambitious car CO2 targets to provide market certainty.
• Strengthening local manufacturing policies with robust sustainability requirements.
• Enhancing EU-wide investment support, particularly for midstream activities like cathode production and raw material processing.

Conclusion

The report concludes that while Europe has made notable strides in developing a local battery supply chain, significant challenges remain. Achieving a sustainable and resilient battery industry will require concerted efforts from governments, industry stakeholders, and international partners. The next steps for the European Commission and Parliament will be crucial in ensuring Europe does not fall behind in the global battery race.