Transport & Environment (T&E) said in a report published on Monday that boosting battery production inside the European Union could sharply reduce the current cost differential with batteries produced in China.
The report estimates the present gap of about 90% could be cut to approximately 30% by 2030 if EU manufacturing scales up and firms improve production efficiencies. T&E highlights several routes to lower unit costs, including reduced scrap rates, enhanced labour expertise and greater use of automation.
Specifically, the group projects potential savings that would bring the per-kilowatt-hour gap down from $41 to $14 by 2030. On a typical electric vehicle, that change translates into a cost difference of about 500 euros, which the report notes could be further reduced by public incentives or considered an insurance premium against export restrictions already enacted by China on certain critical minerals and rare earths.
T&E links the opportunity to the European Commission's planned policy initiative. The commission is due to propose an Industrial Accelerator Act that would require prioritising locally manufactured products where public funds are used. The proposed measure is intended to target key strategic sectors - including batteries, solar and wind energy, hydrogen manufacturing, nuclear power and electric vehicles.
Not all industry participants agree with local content mandates. Some automakers have warned that imposing local content requirements could raise battery costs to prohibitive levels and harm the competitiveness of their models.
"Europe needs a domestic battery industry as an insurance policy against its supply chains being weaponised. Local content requirements are the only policy on the table to avoid another Northvolt. The cost of Made-in-EU rules is a sovereignty premium worth paying," said Julia Poliscanova, T&E's senior director for vehicles & e-mobility supply chains.
T&E also argues that the EU's Made in Europe plan should explicitly ensure public support schemes cover EV tax rebates not only for private EV owners but also for employers and employees using corporate car schemes. The report stresses that the cost gap will only narrow if local content rules are structured so companies such as ACC, Powerco and Verkor can expand production.
Currency context provided with the report notes $1 = 0.8464 euros.
Overall, the T&E analysis frames a path where industrial scaling, manufacturing improvements and targeted public incentives could materially reduce the price penalty for EU-made batteries while strengthening supply chain resilience.