EU Aims to Reduce Battery Cost Gap with "Made in Europe" Initiative

The European Union (EU) is taking significant steps to bolster its domestic battery production through the upcoming "Industrial Accelerator Act." This initiative aims to reduce the cost disparity between EU-manufactured batteries and those imported from China, which currently stands at approximately 90%. According to a report by the transport and environment campaign group Transport & Environment (T&E), scaling up production in Europe could potentially narrow this gap to around 30% by 2030.

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The "Industrial Accelerator Act," set to be proposed by the EU executive, will prioritize locally manufactured products when public funds are allocated. This legislation is designed to support key strategic sectors, including batteries, solar and wind energy, hydrogen manufacturing, nuclear power, and electric vehicles (EVs). T&E emphasizes that improved manufacturing efficiency, particularly through reduced scrap rates and enhanced labor expertise, could lower the cost of battery production to $14 per kilowatt-hour by 2030, down from a projected $41.

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While the initiative aims to strengthen the EU's battery sector, some automakers have expressed concerns. They argue that local content requirements could render batteries prohibitively expensive, thereby undermining the competitiveness of their models. Julia Poliscanova, T&E's senior director for vehicles and e-mobility supply chains, stated, "The cost of Made-in-EU rules is a sovereignty premium worth paying," highlighting the need for a domestic battery industry as a safeguard against potential supply chain disruptions.

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T&E's report advocates for explicit public support schemes, including electric vehicle tax rebates for both consumers and corporate car schemes. Such incentives could further reduce the cost gap for average electric vehicles, estimated to be around 500 euros ($590), and provide a buffer against export restrictions imposed by China on critical minerals and rare earths.

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Despite the potential benefits of the "Made in Europe" initiative, critics within the automotive sector warn that stringent local content requirements could lead to increased production costs. This concern raises questions about the balance between fostering a domestic battery industry and maintaining competitive pricing for consumers.

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As the EU prepares to unveil the "Industrial Accelerator Act," stakeholders in the battery and automotive industries will closely monitor its implications. The success of this initiative will depend on the EU's ability to support local production while addressing the concerns of automakers regarding cost competitiveness.

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• "Europe needs a domestic battery industry as an insurance policy against its supply chains being weaponised." — Julia Poliscanova, Senior Director for Vehicles & E-Mobility Supply Chains, T&E

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• "The cost of Made-in-EU rules is a sovereignty premium worth paying." — Julia Poliscanova, Senior Director for Vehicles & E-Mobility Supply Chains, T&E

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