'Made in Europe' batteries would cost less than feared, finds new report

As Brussels debates whether to set "Made in EU criteria" for public funding in the Industrial Accelerator Act, a fresh report from Transport & Environment reveals how scaling up production would dramatically reduce Europe's current cost disadvantage against Asian battery manufacturers.

The findings come as homegrown battery makers like ACC, Powerco and Verkor face mounting pressure to remain competitive.

Limited economies of scale

Right now, European battery cells are on average 17% pricier than those made in the US and 90% more expensive than Chinese batteries, T&E's analysis shows. That translates to a cost gap of $41-43 per kilowatt-hour.

But this gap largely reflects limited economies of scale rather than any structural disadvantage, according to T&E.

Batteries account for the lion's share of an electric vehicle's production costs – between 83% and 86% depending on the carmaker. A substantial chunk of an EV's value chain is already local, with 45% to 70% of key components' value occurring in Europe.

Slash costs

With policy support, improved manufacturing efficiency and automation would slash costs by almost a third by 2030, T&E says. That would bring the gap down to around $14 per kilowatt-hour – an additional €500 per electric vehicle, ranging from €300 to €750 depending on the carmaker.

T&E frames this as a "sovereignty premium" – an insurance policy against geopolitical volatility and supply chain disruptions.

This cost reduction would only happen if consistent union content requirements are introduced, T&E says.

The debate highlights a familiar tension: some in the automotive industry claim Made in EU requirements would undermine competitiveness. T&E's analysis suggests the long-term cost of not building local capacity could be far steeper.