The European Commission announces the general lines of its action plan to reduce its dependence on China for the production of batteries for electric cars. Two strategies based on the IRA already in force in the United States will be implemented.
For many months now, specialists have been sounding the alarm about the risks of the invasion of Chinese manufacturers in Europe. But in addition to the arrival on the market of new brands such as Nio, Xpeng or BYD, experts are concerned of our dependency for the supply of raw materials. But that might not last.
Two new plans presented
The European Commission has finally decided to implement measures to fight against Chinese superiority, according to the NGO Transport and Environment, which also recently warned about US competition in the manufacture of batteries. In fact, many equipment manufacturers and suppliers are leaving Europe to produce in the United States, due to more attractive tax advantages. This is particularly the case for Volkswagen, which is reluctant to move its battery production across the Atlantic.
Will this change with Europe’s strategy? Not necessarily, because has not yet announced a grant award like North America does. As a reminder, the IRA (Inflation Reduction Act) provides a $370 billion envelope for the companies that play the game by producing in the USA with locally sourced materials.
This explains why Tesla wants to reduce the production of 4680 cells in Europe and why Volkswagen wants to move there too. Not to mention, electric cars assembled in the territory are eligible for a $7,500 tax credit.
Starting in 2024, it will be necessary for half of the battery components are also made in the United States to benefit from a second bonus, earmarked for battery production. This represents about a third of the cost of manufacturing a battery ($45 per kWh of battery produced). We better understand the sudden industry-wide interest in setting up factories in the United States.
For his part, he Critical Raw Materials Law Europe aims guarantee a safe, diversified, affordable and sustainable supply » materials such as lithium, cobalt or even nickel used for electric car batteries. So, by 2030, at least 40% of the transformation of materials will have to be done in Europe while 15% recycled materials must be used.
Develop a clean industry
A target that shouldn’t be too difficult to achieve, as Mercedes promises a 96% recycling rate for its batteries, thanks to a new factory to be set up in Germany. In addition, the critical raw materials law establishes that Europe does not depend on a single third country for more than 65% of its imports for each of the eighteen raw materials that you have defined as strategic.
For this, several strategies will be implemented, such as the signing of alliances with countries in Africa, Latin America and North, in order to reduce dependence on China. Because at the moment, the production of batteries for electric cars takes place mainly in the Middle Kingdom. Even if some players like CATL are starting to establish themselves here.
A second plan, called Zero Net Industry Law it was also presented by the European Commission, chaired by Ursula von der Leyen. It deals in particular with the manufacture of clean technologies in the Old Continent, in order to cover 40% of the needs in 2030. To this end, the procedures for the granting of permits for the installation of industrial estates and financing will be simplified. Several areas should benefit from this measure, such as solar or wind energy.
This could have a direct impact on electric car users, with charging using greener energy. This would reduce the voltages in the electrical grid by increasing the sources, while reducing the price of cargo. A hydrogen bank should also see the light, while some manufacturers like Toyota and Hyundai believe in this engine.
If indeed subsidies will be granted to the companies that will participate in the game, the European Commission has not yet published precise figures for now, unlike the United States. So all you have to do is wait a few more weeks for more information.
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