(Finance) – TheEuropean Union “He risks staying back in the race to become a global battery superpower“, according to a report released today by the Court of Auditors European. It is true that the EU has effectively promoted its industrial policy on batteries in recent years, but access to raw materials remains a major stumbling block, together with rising costs and fierce global competition. The efforts made by the EU to strengthen its battery production capacity may therefore not be enough to meet the growing demand and, warn the auditors of the European Court of Auditors, the therefore achieving the goal of zero emissions by 2035 is at risk.
Nearly one in five new cars registered in the EU in 2021 was a rechargeable electric one, and the sale of new diesel and petrol cars will be banned in 2035. Batteries will therefore become a strategic imperative for the EU. However, the European battery industry is lagging behind global competitorsespecially the Chinawhich represents over the 76% of world production capacity. To win this bet and make the EU a global battery superpower, the European Commission published a strategic action plan on batteries in 2018. It has largely provided the essential tools outlined in the plan to support the sector, such as strategic leadership, regulation and funding.
“For batteries, the EU must not end up in the same position of dependency as it did for natural gas; its economic sovereignty is at stake,” he said. Annemie Turtelboom, the ECA Member responsible for the audit – By planning to halt the sale of new petrol and diesel cars for 2035, the EU is betting heavily on batteries. But it could go disadvantaged in terms of access to raw materials, investor interest and costs“.
Between 2014 and 2020, the battery sector received at least €1.7 billion in EU grants and loan guaranteesin addition to nearly 6 billion state aid authorized between 2019 and 2021, mainly in Germany, France and Italy. However, we found that the European Commission does not have an overview of all the public support offered to the sector, which limits its ability to ensure proper coordination and targeted support.
There production capacity battery market is developing rapidly, with the potential to grow from 44 GWh in 2020 to 1 200 GWh by 2030. “However, these projections are by no means a certainty and could be jeopardized by geopolitical and economic factors – notes the Court – First, battery manufacturers could leave the EU and move to other regions, not least the US, which offer them massive incentives. Unlike the EU, the US directly subsidizes the production of minerals and batteries, as well as the purchase of US-made electric vehicles using American components.”
Secondly, the EU is heavily dependent on imports of raw materials, mainly from a few countries with which it does not have trade agreements: 87% of raw lithium imports come from Australia, 80% of manganese imports from South Africa and Gabon, 68% of raw cobalt imports from the Democratic Republic of Congo and 40% of raw natural graphite imports from China. Although Europe has several mineral reserves, it takes at least 12-16 years between discovery and production, making it impossible to respond quickly to increased demand. Instead, existing contractual arrangements typically guarantee a supply of raw materials for only 2 or 3 years of future production.
Thirdly, the competitiveness of EU battery production could be jeopardized by theincrease in raw material and energy prices. At the end of 2020, the cost of a battery pack (€200 per kWh) had more than doubled the planned amount. In the last two years alone, the price of nickel has increased by more than 70% and that of lithium by 870%.