A transportation and environmental advocacy organization released findings Monday indicating that expanding battery manufacturing within Europe could dramatically narrow the cost difference between domestically produced batteries and Chinese imports.
Transport & Environment’s analysis shows that ramping up European production could reduce the current 90% price gap to approximately 30%, making locally manufactured batteries far more competitive in the marketplace.
The European Union’s executive branch plans to introduce its “Industrial Accelerator Act” on Wednesday, legislation that would mandate preference for domestically manufactured goods when government funding is involved. The proposed law targets critical industries such as battery production, renewable energy equipment, hydrogen technology, nuclear power, and electric vehicles.
However, some automobile manufacturers have expressed concerns that requirements for local content could drive battery costs to unaffordable levels, potentially harming their vehicles’ market competitiveness.
According to T&E’s research, enhanced production methods – including reduced waste rates, improved worker expertise, and increased automation – could shrink the cost difference to $14 per kilowatt-hour by 2030, down from a projected $41.
For typical electric vehicle buyers, this translates to a price difference of roughly 500 euros ($590), which could be further reduced through government incentives or viewed as protection against supply chain disruptions like China’s existing restrictions on essential minerals and rare earth elements.
“Europe needs a domestic battery industry as an insurance policy against its supply chains being weaponised. Local content requirements are the only policy on the table to avoid another Northvolt. The cost of Made-in-EU rules is a sovereignty premium worth paying,” stated Julia Poliscanova, T&E’s senior director for vehicles & e-mobility supply chains.
The organization emphasized that cost reductions would only materialize if European local content mandates enable companies like ACC, Powerco, and Verkor to increase their production capacity.
T&E recommended that the Made in Europe initiative should clearly specify that government support programs encompass electric vehicle tax credits for individual buyers as well as corporate fleet programs for businesses and their employees.
