Building up a Charge
June 2019
Europe is in a tricky situation. Despite being a region that, under EU guidance, has ambitious electric vehicle ambitions in the relatively near term (the EU predicts huge growth in electric and hybrid cars, with annual sales figures reaching 7 million and 6 million, respectively, by 2030), its ability to manufacture EV batteries on a large scale and source the raw materials needed for such an endeavor are both currently limited.

The EC has issued recommendations that individual country governments should promote and fund the development of nickel mines and refineries, but Europe is unlikely to be able to match the output of countries like Indonesia, Australia, or the DRC. 

As producers around the world look to gear up and increase nickel production, the EU has instead been focusing on development of the refining and value-added section of the supply chain—with its own reports indicating that “considerable quantities of imports” of nickel and other battery metals will be necessary to feed its demand, even in a best-case scenario. Complicating factors is the EU’s relationship with Russia: despite a tense geopolitical relationship, the EU depends on Russia for much of its nickel supply—a situation that, coupled with some countries’ reliance on Russian natural gas, could allow Russia significant leverage.

Estimates from the World Bank indicate a tenfold increase in nickel, aluminium, and iron demand from energy storage, with nickel set to bear an increasing presence in lithium-ion and other battery technologies—particularly as it replaces cobalt in some applications. Due to the scale of demand, documents outlining the EU’s approach promote the development of “import-dependency” reduction, not self-sufficiency, meaning that the region’s best approach for remaining a relevant contributor to the industry is to become a technologically-forward battery developer.



This approach may be fraught with risk, however, as the battery manufacturing chain in the EU is currently relatively underdeveloped in scale—particularly when compared to its biggest rivals, the US and China. The market potential is significant, however, and the European Battery Alliance, launched in October 2017, assumes that with fast development the EU could capture a cross-sectoral battery market of up to EUR 250 billion a year by 2025. Its predictions include the construction of between 10 to 20 giga-factories, which will cover much of the EU’s battery demand.

The EU does have potential advantages, however, with an already-high focus on ensuring stable supplies of metals from secondary sources. Due to the high demand pressure on primary production, all measures to reduce the demand for primary battery raw materials mitigate potential supply shortages and increase the flexibility of an industry. These approaches include recycling, substitution and greater resource efficiency, and Europe hopes draw on existing knowledge structures and deploy these measures for battery manufacturing.

As an apt example, despite the United States being one of the world’s largest consumers of li-ion batteries, perhaps one in 20 is returned for recycling — a far cry from the 40% collected in Europe, where collection infrastructure is more established.

This kind of established, systematic approach to industry will likely be a key advantage for Europe, particularly when avoiding pollution and implementing a circular industry approach. There is, however, a significant time-lag of about 10 years before batteries reach their end of life and are available for recycling. Due to this time lag, it may be difficult for commercial companies to spend sufficient money in the short term on R&D on recycling.

The first signs of a Europe-wide coordinated approach have begun to actualize. France and Germany have committed to a US$6bn joint project that will see each country construct a large-scale battery production plant within their own borders, beginning solid-state battery construction before 2025. Several industry consortiums have formed, each approaching the battery supply issue with a different angle, but a shared goal: to ensure that European investment does not fall behind Asia or the US.