European battery industry faces critical three-year window for survival

The European electric vehicle battery industry faces a critical three-year window to secure its position against Asian competition, according to a report by the Backbone Coalition. The group warns that failing to act quickly could result in the permanent loss of investment, expertise, and research centers to the United States and China. To protect the value chain—which includes materials, production equipment, and software—the coalition is calling for increased production subsidies, such as a fixed aid per kWh produced, and stronger ‘Made in EU’ requirements for public markets and taxation.

However, transitioning to local production carries significant economic implications. A study by the Bruegel think tank suggests that mandating European-made batteries could increase the price of an electric vehicle by approximately 2,100 euros. This estimate is based on the current cost difference between imported cells and those produced within the EU. While the European Commission aims to offset some costs through simplified vehicle certification, the study indicates these savings would be insufficient to cover the price hikes associated with localized battery manufacturing.