Europe started the race to battery self-sufficiency a few years ago, facilitating the transition of its automotive industry to electric vehicles. One of the clearest examples is the Gigafactory that will be operational in Sagunto (Valencia) in 2025. However, the measures taken so far are not entirely sufficient, according to a report by the European Court of Auditors. In the study published this Monday, it recognized two obvious risks: the USA’s competition for battery cell manufacturers thanks to its aid for investments and products manufactured in this country and the lack of security in the supply of raw materials to maintain the necessary EU production. “It would be good if the European Commission examined or developed a new strategy so that it is clear whether we can produce the batteries ourselves, or whether we have to rely on batteries from outside Europe, or whether we will not meet the zero emissions targets.”, said Annemie Turtelboom, a member of the court and one of the authors of the study, who said very forcefully: “2035 is tomorrow and we are concerned” about the timeframe left before sales of internal combustion engine cars are banned in the Twenty-Seven.
One of the main concerns highlighted in the paper is that the increase in production costs, both due to energy and raw material shortages, can make batteries so expensive that electric vehicles make them “unaffordable” for buyers, thereby reducing demand for electric vehicles and the economic justification of investment in production facilities”, a real fish biting its tail.
The starting point of the report are the goals of the European Green Pact. This strategy envisages the introduction of 13 million zero-emission or low-emission cars in 2025 and increasing to 30 million in 2030. The 27 has already announced that for five years later the commercialization of vehicles with diesel engines will take place in its territory burning is prohibited. The authors of the report point out that the action plan launched by the European Commission in 2018 is positive overall. They make it clear that it has “shortcomings” that jeopardize its goals, as the necessary batteries for the vehicles may not be made on the continent or may be sourced from other regions, perpetuating the current dependency.
Among other things, it is doubtful that the production capacity of 1,200 gigawatts per hour in batteries can be achieved in 2030 (in 2020 it was 44 GWh), “due to geopolitical and economic factors”, in particular due to the high dependence on supplies from imports. “By 2030, EU manufacturers face a looming shortage of raw materials for batteries,” says the report, which blames the uncertainty on the global race for cobalt, lithium, manganese, graphite and nickel and the lack of a mining plan for internal supply of these products in Europe.
The report shows that despite promises from the European Commission, the EU “still lacks free trade deals” with the world’s top producers of battery raw materials. China stands out, but so do the Democratic Republic of the Congo and Australia. Turtelboom, meanwhile, has denounced that mine exploitation processes in Europe remain lengthy and complex. You have to spend between 12 and 16 years to start an exploitation and the other way to get the necessary minerals, recycling, is very marginal as there are currently few vehicles with batteries on European roads, namely hardly any one % of the entire park. The Court of Auditors clarifies the seriousness of the matter: “Two European battery manufacturing projects, funded by the EU budget and examined by our audit, have contractual arrangements that only guarantee the supply of raw materials for two or three years of future production.”
China was the largest battery producer in 2021 with 76% of global capacity. The European Union and the United States followed with 7% each. And while European manufacturing has taken the lead in the electric vehicle industry, it could be left behind by strong US investment policies. Between 2022 and 2031, $6 billion is planned in addition to an additional $15.9 billion in tax credits for production across the battery value chain, including mineral extraction. In addition, it plans to allocate another 7,500 million to subsidize the purchase of electric vehicles made in the US or in other countries with which they have signed a free trade agreement. The aim is to subsidize one million cars.
The figures provided by the report on European aid refer to the period 2014 and 2021, are much lower and do not take into account next-generation funds. In any case, the Court of Auditors warns of the problems arising from the flows of municipal and state aid that ultimately result in an “adverse situation” for the battery development plan as a whole. “Battery makers may reverse their plans to expand EU manufacturing capacity in response to more attractive financing terms in other regions of the world,” he concludes.
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