French President Emmanuel Macron wants electric car purchase subsidies to benefit only European-made EVs. German Chancellor Olaf Scholz also seems to back this plan. At the same time, it appears that the European Battery Alliance to reduce the European Union's (EU) independence in EV batteries is largely dependent on Asian players.
The French president announces this in conversation with France 2. Macron is calling for EU-wide EV purchase subsidies to only be available to EU-made cars. This is not the first time that voices have raised for this in France. Earlier, France's finance minister also called for such a restriction on EV subsidies.
German support
Automotive News reports that German Chancellor Olaf Scholz is backing the plan. However, it is unclear if and when Macron and Scholz plan to present the idea in the EU. Among other things, Macron points to competition from Chinese EVs, for which the door is currently wide open in the EU. This, according to the French president, needs to change.
In doing so, Macron is following a line we also see in the US. US President Joe Biden, for instance, announced a similar measure earlier this year. Only cars built in the US can still receive a US purchase subsidy for EVs.
EU relies on Asian battery production
The EU has long been committed to strengthening its position on EVs. One way it is doing this is with the European Battery Alliance, established in 2017. This alliance should lead to a European sector for EV batteries. The EU wants European companies to supply 90% of the batteries needed for the energy transition on the European continent by 2030. Market researcher Benchmark Mineral Intelligence (BMI) estimates that European production capacity will be around 1,200 GWh by 2031. This exceeds the expected demand of 875 GWh.
What is striking, however, is that this manufacturing capacity seems to come largely from European factories of Asian companies. 44% of the capacity comes from Asian players, 43% from European companies and 13% from US-based Tesla, Reuters calculates based on data from BMI.
'Some plans never get off the drawing board'
Caspar Rawles, chief data officer at BMI, also warns about the feasibility of some plans. Rawles expects that some plans of European companies will never get off the drawing board in practice. He also predicts that the share of Chinese, Japanese and South Korean companies will continue to rise. For instance, these parties already have contracts with global carmakers such as BMW, Mercedes-Benz, Stellantis and Volkswagen. They are also building so-called gigafactories worldwide. "The vast majority of European capacity will be Asian," Rawles therefore argues.
Currently, China's Contemporary Amperex Technology Co, Limited (CATL) is planning the largest EV battery production capacity in the EU with 180 GWh by 2031. Europe's Northvolt follows with 152 GWh, which includes 30 GWh of production in collaboration with Volvo. US Tesla plans 150 GWh of production capacity in Europe, while Europe's ACC - an alliance of Total, Stellantis and Mercedes-Benz - plans 120 GWh. South Korea's LG Energy Solutions plans 115 GWh of production capacity.
Incidentally, other European players are also active in the EV battery market. However, these parties are not expected to have gigafactories by 2032. One example cited by Reuters is Slovakia's InoBat, which will open a 45 MWh pilot production line in Bratislava early next year.
Author: Wouter Hoeffnagel
Photo: Pixabay / geralt
