At the tense and largely unproductive EU-China summit in July, European Commission President Ursula von der Leyen raised a growing concern within Europe: China’s industrial overcapacity, particularly in sectors such as green batteries.
The summit ended little progress besides a shared acknowledgement of the issue. ‘We need to see progress,’ she warned in an official statement. “Because without, it would be difficult for the EU to maintain its current level of openness.”
These concerns are well-founded. When it comes to the green batteries essential for storing renewable energy and advancing the green transition, Europe stands at a crossroads.
Today, 75% of European domestic green battery production capacity remains under South Korean ownership, with China controlling 70–90% of critical battery components. It is a worrying dependency that uncomfortably echoes our past reliance on Russian energy.
Already, the warning signs are there. Chinese export restrictions on battery technology and raw materials have shown that these same supply chains can be turned into geopolitical weapons.
But Europe’s exposure is really a symptom of a deeper problem: weaknesses at home, including production costs 50% higher than China’s.
The bankruptcy of Sweden’s Northvolt, Europe’s flagship battery investment, has brought these issues into sharp relief. It has become clear that building competitive battery infrastructure is an enormous undertaking, burdened by high costs and the complexity of managing an entire supply chain.
Even partial self-sufficiency would require massive gigafactory-scale facilities, each costing 3 to 5 €billion. On top of that, strict EU regulations mean raw materials must be OECD-compliant, and battery plants must integrate recycled content and reach 90-95% recovery rates in battery recycling.
Focus on niche sectors
Europe doesn’t need to copy China and South Korea. It needs to compete differently.
Rather than trying to match Asian battery giants on scale and price, European companies should focus on high-value, high-innovation niches that Asian producers are unable to fully address — and where local expertise, regulation and trust give us a natural advantage.
Take aerospace and defence. These sectors demand batteries that can operate in extreme conditions and meet stringent safety and security standards. Chinese suppliers often face restrictions under ITAR (International Traffic in Arms Regulations), which key European players such as Saft or Lincad are not subject to.
Or consider the marine and offshore wind sectors. Both rely on marine-certified batteries to power zero-emission port operations. Complex European maritime regulations create high natural barriers for outside suppliers, including Chinese manufacturers.
The same is true of Europe’s MedTech sector — encompassing pacemakers, hearing aids and implantables — which requires biocompatible batteries subject to strict oversight by the European Medicines Agency. These niche markets naturally favour trusted, homegrown players.
Industrial decarbonisation
It’s not a matter of cost — it’s about finding smart solutions that align with circular economy principles.
Battery reuse and recycling are not just add-ons; they are an important part of the future. While Northvolt had ambitious recycling plans prior to its collapse, we should not let the failure of one company shake our resolve.
According to analysts at McKinsey and BloombergNEF, the battery reuse market is on course for exponential growth, as second-life batteries become increasingly vital to achieving green energy targets.
Of course, Europe cannot go it alone. Total independence is neither realistic nor desirable in a globally interconnected green economy.
Asian players will remain essential partners in building a resilient and sustainable European battery industry. Licensing deals and strategic partnerships will be critical. It’s likely that Europe will always import batteries for E-vehicles from China.
But Europe can and must forge its own path. With the right frameworks in place, we can create resilient homegrown champions with the ability to both cooperate and stand apart from Asian providers by mastering specialisation and innovation.
This is where public policy support becomes essential. National and EU instruments are essential, but so too is early-stage local and regional investment. Public-private ecosystems will be vital if Europe is to foster industrial champions that lead through innovation rather than attempting to replicate Asian scale.
