According to the European Court of Auditors, Europe’s plan of becoming a world leader in battery development and production is at risk. The stakes are high. If Europe fails in shaping up, the energy transition can falter, while it might also affect the 2035 ban on combustion engines.

In 2018, the European Union issued the Battery Act, a plan to produce 1 200 GWh of battery packs by the end of the decade, sufficient to provide 12 million electric cars by the end of this decade with cells and to free the region from Chinese dominance. Still, five years after kickstarting the plan, the progress is lagging.

Only 7% of global production

Today, China accounts for 76 percent of the global battery production capacity and rules the market. Europe doesn’t surpass 7 percent, and three-quarters of its dedicated industry is in the hands of South Korean companies.

The European Court of Auditors, led by Belgian politician Annemie Turtelboom (Open Vld), calls Europe’s position “weak” and points to shortcomings, such as challenging access to raw materials, rising costs, and, above all, investors holding a lukewarm stance.

It stands in the way of the strategy’s efficiency and success. Also, the Commission lacks a good overview of where its incentives and support eventually land. Not least, Biden’s Inflatory Reduction Act has more on offer to persuade companies that construct battery production plants to choose the US over the EU.

Critical Raw Materials Act

Where Chinese competition has ready access to raw materials, the companies in the EU are currently dependent on countries lacking a trade agreement. This means European companies are at a disadvantage in terms of costs and time to market due to the lengthy and complex processes required for importing from non-EU countries.

Turtelboom pointed to Australia, where 87 percent of imported lithium comes from Congo, responsible for 68 percent of the cobalt supply; Turtelboom parallels Europe’s troublesome gas linkage to Russia before the Ukrainian War in this dependency.

Raw Material Act

However, last month, the European Commission presented its Raw Material Act, which sets a benchmark for local sourcing and setting up supply chains for critical battery materials within the region.

According to the Act, 10% of raw materials mined, 40% of materials processed, and 15% of recycled materials must be domestically produced. Critics doubt these targets, due to environmental complexity, especially in mining.

The resistance to mining is strong among member states. Moreover, producing newly discovered raw materials takes 12 to 16 years. Thus, the newly discovered reserves in France and Sweden might come too late to fully support the ban on combustion engines by 2035.