May 17, 2024: Less than half of the lithium-ion battery production planned for Europe up to 2030 is secure, says the latest report from UK-based Transport & Environment consultancy. However, the report says the remaining 53% of announced cell manufacturing capacity is still at medium or high risk of being delayed, scaled down or cancelled without stronger government action.

T&E says this is up from one-third a year ago following European incentives put in place to respond to the US Inflation Reduction Act.

Julia Poliscanova, senior director for vehicles and e-mobility supply chains at T&E, said that to meet existing targets, “European leaders will need joined-up thinking to reap their climate and industrial benefits. Strong sustainability requirements, such as the upcoming battery carbon footprint rules, can reward local clean manufacturing.

“Crucially, Europe needs better instruments under the European Investment Bank and EU Battery Fund to support gigafactory investments.”

However, other analysts say next month’s European Parliamentary elections looks set to change the EU political landscape completely. European politics has shifted to the right — which is likely to be reflected in the new European Parliament. In practice, this will involve  moving further away from climate-change idealism to hard-nosed practicalities over the cost of such a change.

Finland, the UK, Norway and Spain have the most production capacity at medium or high risk due to question marks over projects by the Finnish Minerals Group, West Midlands Gigafactory, Freyr and InoBat.

T&E called on lawmakers to help lock in investments by doubling down on EU electric car policies, enforcing strong battery sustainability requirements that reward local manufacturing, and beefing up EU-level funding.

The calls for “doubling down” from the consultancy are likely to fall on deaf ears. This is because car manufacturing OEMs around the world are having to re-evaluate their business strategies given a poor EV uptake by the general public.

Poliscanova said: “The battery race between China, Europe and the US is intensifying. While some battery investments that were at risk of being lured away by US subsidies have been saved since last year, close to half of planned production is still up for grabs. The EU needs to end any uncertainty over its engine phase-out and set corporate EV targets.”

Effectively, European governments are trying to balance two opposing factors — the need for EV battery manufacturing to be self-contained within the continent whilst also not offering a blank cheque to the general public in subsidies to buy the vehicles.

Securing other parts of the battery value chain will be even more challenging given China’s dominance and the EU’s inexperience. The report finds Europe has the potential to manufacture 56% of its demand for cathodes — the battery’s most valuable components — by 2030, but only two plants have started commercial operations so far.

By 2030 T&E believes the region could also fulfil all of its processed lithium needs and secure between 8% and 27% of battery minerals from recycling in Europe. But T&E said processing and recycling plants need EU and state support to scale quickly.

These recycling assumptions could well be severely flawed. The new Battery Regulation, which was voted into effect at the end of July 2023, contains “fanciful and over-ambitious targets” according to leading commentators in an after-presentation expert discussion at the Asia Battery Conference last September.

The Battery regulation sets a target for lithium recovery from waste lithium-ion batteries of 50% by the end of 2027 and 80% by the end of 2031. It also provides for mandatory minimum levels of recycled content for industrial, SLI batteries and EV batteries. These are initially set at 16% for cobalt, 85% for lead, 6% for lithium and 6% for nickel. These are raised to cobalt 26%, lead 85%, lithium 12% and nickel 15%.

Steve Binks, a director at the International Lead Association said in that discussion that the recycled content target levels proposed in the Battery Regulation had been set by political will rather than expert analysis.

“The consultants who advised the Commission wanted to set more realistic, achievable targets than these, but their views were overruled during the political process,” he said.