With the development of electric cars, the production of batteries is becoming a major issue. For the European Court of Auditors, Europe’s battle plan in this area has flaws.
Europe has made the radical choice to prohibit the sale of thermal cars from 2035. This decision makes the production of batteries for electric cars an absolutely major issue on the industrial level. As things stand, it is above all Asia and more specifically China that is benefiting from the boom in electric cars.
Europe has finally woken up and is now trying to catch up. With this in mind, the Commission drew up a battle plan in 2018. The Court of Auditors nevertheless considers that the Union’s strategy has flaws. In a report published earlier this week, she expressed her concerns and called for a “new strategic impetus”.
A Europe that is too dependent on foreign countries
The document points to the problem of the supply of raw materials and the risk of a global shortage. Europe is today in a delicate situation, since it still depends far too much on third countries. According to data from the Court of Auditors, dependence on foreign countries averages 78% for cobalt, nickel, lithium, manganese and natural graphite.
The fact that imports come from a small number of countries further weakens Europe’s position. “About 87% of the lithium raw, 68% of raw cobalt, 41% of manganese and 40% of raw natural graphite are imported from a single country”, notes for example the Court in its report. However, several importing countries are experiencing an unstable political situation. As Europe has not always been able to secure its supplies through free trade agreements, the situation could one day become perilous.
In 2021, 76% of electric car batteries came from China, only 7% from Europe. The figures clearly show the extent of the challenge facing the European Union. The United States is also lagging behind, again with 7% of world production. They are nevertheless seeking to catch up, notably through a series of subsidies and tax breaks for companies that decide to set up their factories in the country. Faced with this, the Court of Auditors considers that the Union must also review its regulations to be more competitive and stay in the race.
The risk of the explosion in the price of electric cars
While some manufacturers promise to democratize electric cars in the short or medium term, the Court of Auditors is alarmed by a possible price increase in the years to come. She even explains in her report that “batteries and therefore electric vehicles could become unaffordable for a large number of owners”due to “the increase in the cost of factors of production such as energy and raw materials”.
Also, to manage to lower prices significantly, manufacturers may be forced to use smaller batteries, even if it means sacrificing a little autonomy. This is a reflection that Dacia and more generally the Renault group are leading.
In short, Europe still has many challenges to meet, and it will be necessary to act quickly, because the deadline of 2035 is not so far away. The Court of Auditors is also asking the Commission to review its 2018 action plan to stay in the race.
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