Made in Europe push could narrow battery cost gap with China, T&E report says

Summary

The European Union could significantly narrow the cost gap between locally produced electric vehicle batteries and Chinese imports if it accelerates domestic manufacturing under its proposed “Made in Europe” strategy, with the difference potentially falling from about 90% today to roughly 30% by 2030, according to a new report by Transport & Environment (T&E).

The European Union could sharply reduce the price disparity between locally produced EV batteries and cheaper Chinese imports by scaling up domestic production and improving manufacturing efficiency, a report from campaign group Transport & Environment said.

Currently, batteries made in Europe cost about 90% more than those produced in China. However, the report estimates that higher production volumes, better factory utilization and lower scrap rates could shrink the gap to around 30% by 2030.

The findings come ahead of the European Commission’s expected unveiling of its Industrial Accelerator Act, which aims to prioritise European-made technologies in publicly funded projects across strategic sectors such as batteries, renewable energy, hydrogen, nuclear and electric vehicles.

Sovereignty versus competitiveness

The debate reflects Europe’s broader industrial dilemma: balancing affordability with supply chain resilience.

Some automakers warn that strict local-content requirements could push up EV prices and undermine competitiveness. But T&E argues the long-term benefits of supply security outweigh short-term cost pressures.

The group estimates the price difference could fall to about $14 per kilowatt-hour by 2030, compared with a potential $41 gap without policy support. For a typical EV, that would mean roughly €500 in additional cost, which could be offset through incentives or treated as a strategic premium to reduce reliance on imports.

Concerns about supply security have intensified after China imposed export controls on certain critical minerals and rare earths, highlighting how battery supply chains can become geopolitical leverage points.

Julia Poliscanova, senior director for vehicles and e-mobility supply chains at T&E, said building a domestic battery industry is essential to safeguard Europe’s automotive sector from disruptions.

The report also emphasises that cost reductions depend on scale. Manufacturers such as Automotive Cells Company (ACC), PowerCo and Verkor will require sustained policy backing and predictable demand to reach competitive production levels.

T&E further recommended that the “Made in Europe” framework include EV tax incentives for both consumers and corporate fleets to stimulate demand for locally produced batteries.

Why this matters

Europe’s push to localise battery production is about more than cost — it is a strategic effort to secure the foundation of its electric vehicle industry. As EV adoption accelerates and supply chains become increasingly politicised, narrowing the cost gap with China could determine whether Europe remains globally competitive while reducing exposure to geopolitical risks.

FAQs

Q1. Why are EU-made batteries more expensive than Chinese ones?

Europe’s battery sector is still scaling up and lacks the manufacturing efficiencies and supply chain depth of established Chinese producers.

Q2. How could the cost gap shrink?

Higher production volumes, automation, improved yields and reduced scrap rates could lower per-unit costs significantly.

Q3. What is the Industrial Accelerator Act?

It is a proposed EU policy framework to prioritise European-made products in publicly funded projects across strategic industries.

Q4. Will local production increase EV prices?

There could be modest short-term increases, but incentives and scale efficiencies may offset much of the impact over time.

Q5. Why is supply chain security important?

Dependence on a single country for critical components exposes the industry to geopolitical and trade risks.