March 9, 2023: Nearly 70% of Europe’s overall planned pipeline of lithium ion battery cells production capacity by 2030 is at risk of being delayed, scaled down or cancelled, according to stark new analysis published on March 6.
The study by clean transport campaign group Transport & Environment indicates around a fifth (285GWh) of Europe’s 1.8TWh expected EV battery factories potential is at ‘high risk’ and a further 52% (around 910GWh) at ‘medium risk’.
Overall, 68% of the potential battery cell supply in Europe is at risk if further action is not taken — and the EU will be unable to satisfy its battery demand without imports from foreign rivals, T&E said.
T&E’s senior director for vehicles and e-mobility Julia Poliscanova said: “EU battery manufacturing is caught in the crossfire between America and China. Europe must act or risk losing it all.
“A green industrial policy focused on batteries with EU-wide support for scaling up production is urgently needed to react to US subsidies and China’s years of dominance.”
The study increases pressure on EU leaders following crisis proposals unveiled last December by the European Battery Alliance to avert a potential investments meltdown for European gigafactory plans, amid fears cash is instead flowing into projects in the US and Asia.
T&E’s analysis is derived from publicly available information assessing 50 gigafactories planned for Europe by 2030 — based on the projects’ maturity, financing, permits, secured factory sites and project companies’ links to the US.
On top of China’s dominance in EV supply chains the US Inflation Reduction Act, which is expected to pour at least $150 billion into battery components and metals manufactured in the US or ‘friendly countries’, is “changing the rules of the game fast”, the study says.
In terms of global investment into lithium ion batteries tracked by Bloomberg New Energy Finance, Europe’s share dropped from 41% in 2021 to a meagre 2% in 2022, while investment in China and the US continued to grow, according to T&E.
Germany, Hungary, Spain, Italy and the UK stand to lose the most if battery-makers change their plans, according to the study.
“Tesla’s Giga Berlin plant has the largest volumes at risk of being delayed in Europe after the company said it will focus cell manufacturing in the US to take advantage of incentives under the Inflation Reduction Act.
“There is a medium risk to Northvolt’s planned gigafactory in Heide, Germany, as the company has only secured part of the funding and has not started construction. Also, Northvolt’s CEO said last October that it might delay the plant and prioritize expansion in the US.”
The study comes ahead of the European Commission’s expected publication on March 14 of a ‘Net Zero Industrial Act’, as part of the EU’s response to tax benefits and subsidies provided by the IRA for localizing battery supply chains in the US.
Key study recommendations include Europe “locking in” the 2035 engine phase-out for new cars and vans and introducing a similar deadline for trucks.
The study also joins the European Battery Alliance in calling for simplified permitting and approval processes for battery-related projects, while ensuring “strong social and environmental safeguards and engagement of local communities”.
Simple tax breaks and production finance for best-in-class projects are also recommended.
Meanwhile, a new European Critical Raw Materials Act should prioritize EU projects in refining, processing and recycling, while working with partners to import responsibly sourced materials.
All of the companies referred to had yet to respond to requests for comment at the time of going to press.
In a related move, the EU and Canada have launched a ‘matchmaking’ service to spur investment in businesses critical to battery manufacturing — click here to read our separate report.