Europe’s Battery Industry: The Key to Sustainable EV Growth

Europe has the potential to become a major player in the global battery industry, with Transport & Environment predicting that the continent could achieve self-sufficiency in battery cell production by 2026.

By 2030, Europe could meet most of its demand for critical battery components and materials, reducing reliance on imports and strengthening energy security.

However, achieving this won’t be easy. More than half of planned giga-factory projects in Europe are at risk of delay or cancellation, according to new reports from McKinsey and T&E.

Despite these challenges, building a robust battery production capacity could make Europe a leader in the electric vehicle (EV) and renewable energy sectors.

The environmental case for local battery production

One of the strongest arguments for localising the battery supply chain in Europe is the significant environmental benefits. By producing batteries within the continent and relying on the EU’s electricity grid, Europe could cut carbon emissions by 37% compared to battery production in China.

If Europe further focuses on renewable energy sources, emissions could be slashed by 62%, offering a clear advantage for the planet.

These efforts could lead to a reduction of up to 133 million tonnes of CO₂ by 2030. Beyond lowering carbon emissions, Europe could also emerge as a key producer of vital battery components.

By 2030, the continent could supply over half (56%) of its cathode needs and fully meet its demand for processed lithium.

McKinsey’s Battery 2030 report lays out several important recommendations for policymakers.

“Our Battery 2030 report, produced by McKinsey together with the Global Battery Alliance, reveals the true extent of global battery demand – and the need for far greater transparency and sustainability across the entire value chain,” comments Benedikt Sobotka, CEO of Eurasian Resources Group.

Benedikt emphasises that the lithium-ion battery value chain is set to grow by more than 30% annually from 2022-2030, driven by the rapid growth of EVs and clean energy technologies.

He also stresses the need for this expansion to be sustainable, focusing on environmental, social and governance (ESG) factors: "It’s time we transition to a more circular, sustainable and just value chain that protects our planet’s biodiversity and resources and ensures human rights are respected globally.”

Overcoming production challenges

Despite the opportunities, Europe’s battery production sector faces significant hurdles. The high costs and logistical challenges of scaling up production have left many projects in limbo. A reliable supply of raw materials such as lithium, cobalt and nickel is critical, but securing these resources remains a key challenge.

Building the required technical expertise within the workforce is also crucial for maintaining and expanding production capacity. The capital-intensive nature of battery production, from building facilities to covering ongoing operational costs, presents further difficulties.

To address these challenges, policymakers must commit to strong and consistent long-term support. This includes setting ambitious targets for lowering vehicle emissions, securing local manufacturing and providing incentives for battery recycling and circular economy initiatives.

Mathias Miedreich, CEO of Umicore, highlights the importance of collaboration and sustainable practices: "Umicore is a proud founding member of the Global Battery Alliance and a strong supporter of its Battery Passport project, as they align with our ambition to roll out a decarbonised and responsible battery supply chain."

He adds: “Acceleration in EV sales will go hand in hand with unprecedented growth in the production of rechargeable batteries that are sustainably sourced, manufactured, used and recycled.”

Securing Europe’s battery future

For Europe to establish a sustainable and self-sufficient battery industry, a coordinated strategy is essential. Harmonising EU regulations to promote the decarbonisation of transport, securing a stable supply of raw materials and supporting local manufacturing are critical steps in this journey. Equally important is ensuring that sustainability remains a priority throughout the battery supply chain, fostering a circular economy that minimises environmental impact.

As Benedikt concludes: "Batteries and the metals that go into them, are the new oil."

While the road ahead is full of challenges, with the right policies and vision, Europe could position itself as a global leader in the battery sector and drive the transition to a green future. 

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