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Paris: Europe, which is trying to compensate for the significant delay in the production of electric batteries for the automotive industry, is witnessing the establishment of new factories on its soil, but it is threatened by the fierce competition of the United States and China.
“Europe has the means to be competitive,” says Tobias Gerke, a researcher in economic geography at the European Council on Foreign Relations (ECFR). “We are in an acceptable position but the pressure is mounting.”
Nearly 50 lithium-ion battery plants are slated to be built in Europe by 2030, which is almost non-existent today.
Germany is the most advanced country with 498 GWh of projects in pipeline, followed by Hungary (224 GWh) and Norway (136 GWh). France comes in fourth with 122 GWh, according to the nongovernmental organization Transport and the Environment. Taiwanese group ProLogium confirmed it would build a fourth factory in Dunkirk, which President Emmanuel Macron is visiting on Friday.
But according to the NGO, 68% of these projects are not final and may be “downsized or delayed if not cancelled”, particularly because of US competition boosted by subsidies provided under what is known as the Inflation Reduction Act (IRA).
This US government plan provides massive tax breaks for the green industry and energy transition in order to counteract China’s rise in renewable energy.
“At its core, the US inflation bill is cutting taxes on electricity production to finance green electricity,” says Tobias Gerke. Hydrogen, for example, is now more affordable thanks to this legislation.
Europe has a major competitiveness problem. “We pay twice as much for electricity as in China,” Gerke says ruefully. He adds that we must “provide energy subsidies in order to make up for the delay. The Americans understood this very well and adopted the legislation.”
In December, the cost of lithium-ion batteries was 24% more expensive in the United States than in China. In Europe, it was 34% more expensive.
The researcher says that Europe’s goal of producing all the batteries needed for the automotive industry on its soil by 2030 seems unrealistic at this stage.
Another major impediment is access to basic materials such as graphite, lithium, nickel, manganese and cobalt, the supply chain of which China largely controls.
China controls 75% of the refining of lithium and 50% of cobalt and is expected to maintain leadership in battery production over the next five years, according to BloombergNEF forecasts.
Given this situation, Europe has begun to act with the issuance of the “Critical Raw Materials Act which sets out the goal of establishing strategic partnerships and creating a common procurement platform at EU level”, explained Diane Strauss, Director of the Transport and Environment Organization in France.
And she added that Europe, although it did not adopt “a law as strong as US law,” but it allowed member states to “disburse government aid more easily.”
Europe is starting from a weak position in the face of China, which is far ahead of it, and the United States, which has incomparable financial power, but it can rely on its internal market, which is one of the first markets for electric cars, even if China is still ahead of it.
“Europe is a bit ahead of the US in terms of electric vehicle dependence,” says Gail Norman, vice president of ProLogium, which wants to open its factory in Dunkirk by the end of 2026. “Europe has very clear legislation,” with a commitment to selling new zero-emission cars from The year is 2035. “This legislation is clear to manufacturers,” he adds, so “when we decided to expand, we chose Europe.”