Challenges and opportunities in Europe’s battery industry
The European battery industry is facing unprecedented growth and considerable challenges at the same time. A current analysis sheds light on the developments and shows prospects for European manufacturers.
Global demand for batteries is expected to triple by 2030 and reach between 4.0 and 4.6 terawatt hours. It could double again by 2040. The market is currently dominated by technologically leading companies from Asia, particularly China. Significant overcapacities there are leading to falling prices globally, which is putting additional pressure on European manufacturers with higher production costs and uncertainties in the ramp-up of electromobility.
European strengths
Despite these challenges, Europe has the potential to play a significant role in battery production. Competitive advantages lie in innovative approaches, high-quality production technologies and a focus on the ecological footprint of batteries. In order to catch up with the Asian market leaders, Western manufacturers must establish cost-efficient mass production, conduct intensive research and enter into close co-operation, including with Asian partners.
Market volatility and future scenarios
Volatility in the battery cell market increased significantly in 2024. The main reasons for this are the lower-than-expected sales figures for electric vehicles and regulatory uncertainties in the USA and the European Union. Experts have therefore developed three scenarios for future demand.
Positive scenario: Rapid progress in electrification leads to demand of 4.6 TWh by 2030 and 8.8 TWh by 2040.
Base scenario: Despite temporary declines in electric car sales, emissions targets are achieved, leading to demand of 4.3 TWh in 2030 and 8.6 TWh in 2040.
Negative scenario: Significant delays, for example due to a postponement of the ban on combustion engines in the EU, result in demand of 4.0 TWh in 2030 and 8.1 TWh in 2040.
These forecasts emphasise the uncertainties and the need for flexible planning for European manufacturers.
Strategies for European manufacturers
In order to be able to compete globally, European companies should pursue the following approaches.
Focus on sustainability: Reduce CO₂ emissions in battery cell production to 30 to 40 kilograms per kilowatt hour by optimising raw material procurement and innovative production processes such as dry coating or laser drying.
Early integration of innovations: Focusing production plans on new, cost-efficient battery types for small and mid-range electric vehicles in order to enter mass production more quickly and benefit from increasing volumes.
Strengthen cooperation: Close cooperation with other European manufacturers and partnerships with leading Asian companies that are ahead in research, development and industrialisation in order to benefit from their expertise.
By implementing these strategies, European battery manufacturers can increase their competitiveness and play a significant role in the growing global battery market.