T&E Claims EU Battery Cell Capacity Drops as IAA Urged to Bolster Value Chain
Transport & Environment says a quarter of announced EU battery cell capacity since 2022 has been cancelled or shelved, calling the Industrial Accelerator Act critical to Europe's battery ambitions.
Transport & Environment (T&E) has raised concerns about the future of Europe’s battery value chain, citing a significant number of cancelled or postponed battery cell projects. The organisation points to the need for robust policy support, such as the Industrial Accelerator Act (IAA), to ensure the region's competitiveness and reduce dependence on non-European suppliers. As battery technology becomes increasingly central to the automotive and energy sectors, the ability to manufacture batteries domestically is seen as a strategic priority for the European Union.
Introduction: The State of Europe's Battery Value Chain
Cancelled and Shelved Battery Projects
T&E reports that since 2022, a quarter of the announced battery cell capacity in the EU has either been cancelled or shelved. This trend has raised alarms about Europe’s ability to establish a secure and self-sufficient battery supply chain. The group highlights Germany as a case in point, noting that the country’s battery project pipeline for 2035 has been reduced by half. This contraction is seen as indicative of broader uncertainty and retrenchment in European battery manufacturing plans.
The setbacks are attributed by T&E to a combination of market volatility and increased competition from established Asian producers, particularly those based in China. With the battery market being highly capital-intensive and sensitive to global supply and demand fluctuations, European projects are vulnerable to shifts in investor confidence and changing policy landscapes.
Dominance of Non-European Manufacturers
T&E states that non-European entities now account for more than 72% of active battery cell manufacturing in Europe. This dominance is not limited to cell assembly; China’s influence extends to the production of key battery materials. According to T&E, China could retain over 80% of the world’s cathode production by 2035, a critical component for battery performance and cost. The group warns that, without decisive policy action, Europe risks locking itself into long-term dependence on foreign technology and supply chains.
The reliance on non-European manufacturers has consequences for the region’s industrial sovereignty and its ability to compete in the global electric vehicle market. European policymakers and industry stakeholders are increasingly aware of the strategic risks associated with this dependency, particularly as electric vehicle adoption accelerates and demand for batteries grows.
Outlook for European Battery Production
Despite these challenges, T&E projects that Europe is on track to produce over 100GWh of lithium iron phosphate (LFP) batteries by 2030. The group also asserts that by 2027, the EU will have sufficient cell capacity to power the corporate electric vehicle fleet. This projection challenges industry forecasts of a looming supply gap, such as the European Automobile Manufacturers’ Association (ACEA) estimate of a 150GWh battery shortfall in 2028, which T&E calls inflated.
T&E further claims that the cost gap between EU and Chinese battery cells will shrink by 70% by 2030. This narrowing of the competitiveness gap is expected to improve the business case for European battery production and could encourage further investment in domestic manufacturing capacity.
The Role of the Industrial Accelerator Act (IAA)
The Industrial Accelerator Act is highlighted by T&E as a crucial policy tool for strengthening Europe’s battery value chain. The group argues that the IAA can support cell and cathode active material (CAM) requirements, foster strategic partnerships, and provide targeted incentives to anchor investment in the region. According to T&E, such policy support is necessary to realise Europe’s battery ambitions and to ensure that the region is not left behind in the global transition to electric mobility and renewable energy storage.
The IAA is designed to accelerate the development of domestic battery manufacturing by addressing regulatory barriers, facilitating access to finance, and encouraging innovation. By creating additional demand for European battery makers and supporting the development of local supply chains, the Act aims to reduce reliance on imports and enhance the resilience of the European battery ecosystem.
Challenges and Opportunities Ahead
The debate over Europe’s battery future is ongoing, as policymakers weigh the potential of the IAA and other initiatives against the realities of a global supply chain dominated by non-European firms. The outcome will have significant implications for Europe’s industrial competitiveness, energy security, and ability to meet climate targets. The success of the IAA and related policies will depend on effective implementation and sustained political will, as well as the ability of European firms to innovate and scale up production in the face of global competition.
Industry observers will be watching closely as the EU seeks to build a more resilient and competitive battery value chain. The stakes are high for manufacturers, policymakers, and consumers alike, as the region strives to secure its place in the fast-evolving battery and electric vehicle markets.
