Access to batteries, their components, and the critical raw materials they require, is increasingly determinant for Europe’s security, both economic and military. The battery sector is a cornerstone of the EU’s industrial strategy.
So far, the Commission has not signalled it is planning significant action on battery production support or trade defense. In this context, using local content criteria in the Industrial Accelerator Act (IAA) as a lever for public support is the only option on the table today for building up a resilient and local battery industry across Europe. Many in the industry want it to take the form of Made in EU requirements: 19 companies and associations shaping the European battery value chain called for Union content criteria in the IAA.
Rewarding Made-in-EU EVs, batteries, key components and materials is necessary to create a clear business case and attract private capital. This act will determine whether homegrown battery makers, such as ACC, Powerco and Verkor, will survive.
Such requirements will support, not undermine, European competitiveness. The current cleantech market is distorted and does not represent fair competition. Without action, the EU will lose its remaining cleantech investment.
The Commission’s impact assessment on the Clean Corporate Vehicle regulation shows that cost increases for Made-in-EU EVs and batteries are modest. The price increase for an average EV equipped with a 68 kWh battery pack, when using EU-made cells, CAM, and anode active materials (AAM) is estimated at around €650-€1,600 per vehicle (roughly 1.4-3.5% of the average retail price, and overall price effects of 1-1.2% by 2030). It must be remembered that these costs will be added to an already subsidised product via EV purchase incentives or company car schemes.
Critically, these costs will decline in the next few years as battery cell and component manufacturing scales due to learning and productivity gains. T&E analysis based on the IEA and BloombergNEF cost models shows that the difference between an average Chinese and European battery cell - the largest cost component in EVs - can drop from 40-50% today to less than 15% by 2030.
Crucially, this topic should not just be considered from an economic angle, but even more so from a resilience standpoint. EU dependencies on rare earths have already been weaponised. The starting point should be that batteries and battery materials could be next. Resilience always looks costly except in hindsight.
Designing and implementing Union content criteria is no easy task. Given the political and technical complexity, focus is key to success. In line with Draghi recommendations, the EU should select a small number of strategic technologies it wants to onshore, including batteries.
This means that:
T&E’s analysis shows that in the first half of 2025, 60% of electric cars registered in the EU were company cars receiving tax benefits, and 11% were private cars receiving purchase subsidies. Overall, over 70% of new EVs in Europe benefit from public support - yet almost none of it is linked to European production. This is the key lever and it is crucial for the IAA to get this right, along the lines above.
Today, Chinese firms account for nearly a third of battery investments in Europe, with an even larger presence in midstream activities such as cathode production. Asian battery manufacturers have received over €2 billion in state aid, while remaining exempt from frameworks that screen, assess or attach conditions.
T&E strongly welcomes the approach on reforming the EU’s FDI framework. Foreign investments into Europe’s EV and battery value chain must meet strict criteria before approval.
The key provisions for such an FDI framework must include:
But this will only be effective if there is uniform application and enforcement in all member states to avoid “country shopping” by investors. At a minimum, the Commission should be able to conduct assessments and take investment decisions on its own initiative. Ideally, Commission approval should be the default for all FDI. Conditions for exemptions must be strictly defined and limited.
