As the European Union is debating whether to set “Made-in-EU” criteria for public funding in the Industrial Accelerator Act, new analysis shows how scale will reduce the current cost advantage of Asian battery makers. Only with Made-in-EU criteria can the industry in Europe scale and learn, which is the critical factor in reducing the cost gap.
Access to batteries, their components and critical minerals is essential for Europe’s economic security and resilience. Battery materials are vulnerable to the same trade weaponisation as witnessed with rare earths, Europe must be prepared.
Without significant action on battery production support or trade defense, using Union Content criteria in the Industrial Accelerator Act (IAA) as a lever for public support is the only option on the table for building a resilient and local battery industry across Europe. This will determine whether homegrown battery makers, such as ACC, Powerco and Verkor, can remain competitive.
Despite the weight of the resilience argument, some in the automotive industry claim that this would make batteries more expensive and undermine their competitiveness.
To address this, T&E has looked at the key cost components of an electric vehicle (EV) and how battery costs would develop were they to be manufactured at scale locally based on IEA and BloombergNEF cost models.
The results show that:
However, the battery cost gap reduction would only happen if consistent Union Content requirements for batteries are introduced. These should only cover strategic sectors at risk of supply chain weaponisation, including upstream components such as precursor materials and attached to all public incentive schemes including existing corporate car taxation. Resilience and security, especially on a continent-wide level, are core tasks for governments, not industry.
To find out more, download the briefing.
