Europe can ditch Chinese batteries, if it can compete with the US: T&E
European campaign group Transport & Environment (T&E) forecast on Tuesday that the EU could end its reliance on Chinese lithium-ion battery cells from 2027, but the US remains a threat to investment.
The new analysis based on companies announcements in the region estimates that 100% of EU battery cell demand in 2027 can be met by domestic production. Two-thirds (67%) of Europe’s demand for cathodes can be European made by then, Kallanish learns.
By 2030, the EU could produce over 50% of its refined lithium needs and recycle 10% of its cobalt demand, 7% of its nickel and 6% of its lithium, the report says.
“But companies could still move projects planned for Europe to the US, tempted by the tax benefits and other subsidies provided by the Inflation Reduction Act for localising battery supply chains in America,” T&E warns. It adds that the new US legislation has “changed the rules of the game, and Europe needs to put more money on the table.”
According to T&E’s senior director for vehicles and e-mobility Julia Poliscanova, Europe needs the financial firepower to support its green industries in the global race with America and China. She argues that the planned European Sovereignty Fund (ESF) can support the continent’s industrial strategy, and not only countries with deep pockets, “but spending rules must be streamlined so that building a battery plant does not take the same amount of time as a coal plant.”
Europe’s climate regulations must be matched with a robust “industrial muscle,” backed by public funding. T&E believes funds from the potential ESF should be disbursed directly by the EU to companies to avoid the slow absorption rates seen under the Recovery and Resilience Facility (RRF). It also defends EU state aid rules should be streamlined so that projects can be scaled up using production aid – as is already permitted in the US.
Today, 50% of the battery cells used in Europe are domestically produced, mainly in Poland and Hungary, with additional strength from Germany and Sweden. This production capacity, currently at 69 gigawatt-hours, can be increased to 773 GWh in 2030, the report says, based on projects in advanced development stages. Yet, the European potential could hit 1.8 terawatt-hour if “uncertain” intended projects are added to the forecast.
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