Study: Relocating EV Battery production From China To EU Can Slash Emissions By 37%

New study finds that shifting EV battery manufacturing to Europe could slash emissions by 37% compared to producing them in China.

Electric Vehicle (EV) batteries are widely regarded as one of the most carbon-intensive components, making them dirtier to manufacture than internal combustion vehicles. However, according to a new analysis by Transport & Environment (T&E), moving EV battery production to Europe could reduce emissions by 37% compared to producing it in China. 

When renewable electricity - common in the European Union (EU) -  is used, carbon savings increases above 60%, find this study. The predicted carbon dioxide savings from meeting Europe's demand for battery cells and components domestically between 2024 and 2030 would be 133 Mt, or the same as the Czech Republic's entire yearly emissions.

“Batteries, and metals that go into them, are the new oil. European leaders will need laser-sharp focus and joined-up thinking to reap their climate and industrial benefits. Strong sustainability requirements, such as the upcoming battery carbon footprint rules, can reward local clean manufacturing. Crucially, Europe needs better instruments under the European Investment Bank and EU Battery Fund to support gigafactory investments,” said the senior director for vehicles and e-mobility supply chains at T&E, Julia Poliscanova.

However, more than half of EV battery production announced for Europe is at "medium or high risk" of being delayed, downsized, or cancelled without government support. Nevertheless, 47% of production locations planned for Europe by 2030 have been secured, up from 33% a year ago. 

The EU and China's dominance in the battery value chain pose challenges in securing other parts of the battery value chain. Europe has the potential to manufacture 56% of its demand for cathodes by 2030, but only two plants have started commercial operations. 

By the end of this decade, Europe could fulfill all processed lithium needs and secure 8%-27% of battery minerals from recycling.

“The battery race between China, Europe and the US is intensifying. While some battery investments that were at risk of being lured away by US subsidies have been saved since last year, close to half of planned production is still up for grabs. The EU needs to end any uncertainty over its engine phase-out and set corporate EV targets to assure gigafactory investors that they will have a guaranteed market for their product,” Julia Poliscanova added. KR