Batteries

What more is needed to onshore the battery supply chain?

Investment support for the battery value chain in Europe remains too slow and unable to properly boost the scaling up of local manufacturing. Production aid remains taboo, and the promised Battery Booster facility is still to be deployed. Similarly, while European battery investments are undercut by unfair global competition, smart trade defense mechanisms are not yet on the horizon. Chinese battery imports, which face virtually no tariffs, increased seven fold between 2020 and 2025. This certainly calls for deploying agile and impactful trade defense in batteries.

As a result, the one meaningful industrial policy on the table is the Industrial Accelerator Act (IAA), announced in March 2026.

Among its many provisions, it attaches Made-in-EU conditions to various public support schemes, such as purchase subsidies and tax incentives for EVs. This is similar to the local content rules that other major regions, including the US, India and Indonesia are using to onshore critical clean tech industries.

T&E supports strong Made-in-EU policies to build Europe’s economic resilience, safeguard jobs and advance its climate and security objectives. The EU should ensure a significant and increasing share of the EV technology stack - batteries and their key components, electronics, e-motors, chips and software - is produced in Europe, including by non-European firms that onshore supply chains and enter genuine value-creating partnerships.

T&E analysis shows there is huge potential in battery production in Europe. Whilst overall production may be half what has been announced, by 2030 we will still have enough cells for subsidised cars and corporate vehicles under the IAA.

Finally, a diverse battery industry is emerging in the EU, made up of South Korean, Chinese and European capacity. Ensuring a diverse EU battery supply chain is vital and it remains possible. But action is needed to avoid an over reliance on any one country and to ensure that foreign investments in Europe’s battery value chain bring value to the continent.

The IAA introduces crucial and long-time overdue conditions to reform the EU’s Foreign Direct Investments (FDI) framework. A more ambitious FDI framework is crucial for strategic sectors such as batteries to counter security concerns and ensure long term added value for Europe’s industrial ecosystem. Europe can no longer merely serve as an assembly plantf or key technologies but needs to master these. T&E urges decision makers to keep the laid out conditions including ownership caps and a minimum 51% EU ownership, mandatory licensing agreements for intellectual property rights and know-how and mandatory EU workforce employment.

How can Europe secure critical raw materials resiliently and sustainably?

Demand for battery raw materials in Europe will increase rapidly between now and 2050 as the continent races to switch to zero-emissions road transport, which is essential for its climate goals. At the same time, the EU is heavily dependent on imports of raw materials and is failing to catch up with investments globally.

Securing a resilient and responsible supply of critical raw materials (CRMs), vital for clean energy technologies, including batteries, will therefore be key. In recent years Europe has accelerated its efforts to secure the supply of these CRMs. However, despite countless memorandum of understandings (MoUs),political declarations and the identification of numerous strategic projects in Europe and beyond, little progress on the ground has been achieved. This is in large part because the EU lacks the right tools to invest in projects. The EU CRM centre should go a lot further than mere coordination and stockpiling. It should have sufficient budget – primarily from the future European Competitiveness fund and the Global Europe instrument under the EU budget – to support domestic and global projects financially.

In parallel, to ensure the transition to EVs is truly sustainable and just, Europe needs strict environmental and social safeguards for its battery supply chains.

Extraction of all manner of resources, including fossil fuels and minerals, has a history of mismanagement. As the world shifts to renewables and electric vehicles, attention is also turning to the centuries’ old problem of how supply chains can become more responsible and sustainable.

The EU Battery Regulation puts in place due diligence rules that will be a turning point for sustainable batteries. But to ensure that they are truly effective, not only across cobalt, but also nickel, lithium and graphite supply chains, they must be implemented well. Lawmakers must ensure the guidelines for implementation are developed according to best practice and existing international standards. Europe must also work with producing countries to inform them about the implications of the regulation – and adequately support smaller companies in meeting the requirements.

Finally, securing a diverse supply of CRMs, avoiding a dependence on China will be key. This can be achieved by operationalising strategic partnerships with trusted partners, building integrated value chains and delivering on projects in partner countries which create local value addition.

Why aren’t we recycling our batteries yet?

Unlike today’s fossil fuel powered cars, EV batteries are part of a circular economy loop where battery materials can be reused and recovered to produce more batteries. The recycling of battery materials is crucial to reduce the pressure on primary demand for virgin materials and ultimately limit the impacts raw material extraction can have on the environment and on communities.

The recycling industry for batteries is ramping up and, by 2030, significant amounts of the battery minerals supply for Europe should come from locally recycled sources.

However, Europe’s recycling industry is struggling to scale. European battery recyclers lack the needed feedstock, with huge amounts of end of life vehicles, waste batteries and black mass being exported outside of the EU, to be processed elsewhere.

On top of this, without a battery value chain in Europe, there will be little demand for recycled materials in Europe. To effectively scale its recycling industry, Europe will need to onshore the entire battery value chain. This includes in particular the midstream industry, including Cathode active materials and their precursors (pCAM). This part of the value chain is key as they will be the offtakers for EU recyclers.

The upcoming Circular Economy Act can and must provide the tools to support the effective scaling of Europe’s material recovery and recycling capacity.