Caught up in a perfect storm, the European electric vehicle (EV) battery industry has been struggling to ramp up production and innovate. Many approaches, including State aid, direct financial support and collaborative efforts, have been tried and have failed or have not made enough of a difference. The situation has been made worse due to the EV market experiencing demand-related headwinds. Although battery electric vehicles have accounted for a rising market share, up from 10.9% in January 2024 to 15% in January 2025, the dynamic has been underwhelming.
Admittedly, battery production is a highly complex process in which it is particularly difficult to regain a competitive position that has been lost. One must move quickly, given the dynamic of global manufacturing capacity, which has grown speedily and reached 2.5 terawatt-hours (TWh) in 2023, with the added capacity being 25% higher than what was added in 2022.
The issue is strategically significant given the importance of EV batteries for the success of the green transition. While other technologies may offer greater usability in the future, it is almost impossible to imagine greening the mobility sector without replacing the internal combustion engine with an electric motor. Battery-powered EVs are more energy efficient given their significantly lower heat loss. As a result, they consume less than one-third of the energy per km compared to internal combustion engine cars.3 Batteries are key for vehicle performance and sustainability. Battery packs account for a significant share of an EV’s total cost, regardless of the fact that there have been rapid decreases in battery prices.
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