Electric Vehicle Revolution Series: Report 2 – Future of European Mining and Battery Manufacturing

Can Europe achieve a complete vertical integration of the EV production on its territory? The short answer is no but, it can certainly reduce its reliance on foreign materials and eventually reap a large share of the global EV market. Rich in its automotive history and legacy, Europe is strong at the end of the EV value chain, i.e. the production of the car. But with the battery accounting for around 40% of total cost of an EV, Europe has still much to do in this sphere. Europe appears weakest at the extreme upstream end of the chain, raw material mining. Mining for lithium, nickel and cobalt can be further developed, but unfortunately supportive policy cannot change a region’s geological endowment. Even if Europe were to develop all its base and probable lithium mines, it would still meet less than half of its expected EV lithium demand in 2030. Keen to avoid the mistake of the lack in recycling of personal handheld electronics, Europe has plans for recycling EV batteries. Nevertheless, as EV batteries have a long life, (warranties range from 6 to even 10 years), large scale recycling will take some time. As for refining, although Europe could achieve self-sufficiency in cobalt and potentially also nickel, it will need to invest even more heavily in lithium than is currently prospected. Moreover, Europe will also need to invest more heavily in the production of cathode active material and precursor. Although Europe might never be able to compete in raw materials , its greatest advantage is its local engineering skills. Digitalization is another area where Europe could compete and even lead. In a report by BNEF, Schneider electric reckons that half of the cost reduction in batteries has been achieved thanks to digital technology and better productivity. Furthermore, whilst around 50% of operating expenses relate to energy consumed in battery production, sensors can help reduce costs. Finally, by further investing locally, Europe can achieve the production of EV cars with lower carbon footprints and eventually become the producers of the least carbon intensive EVs. For instance, the lithium found in an EV car in Europe could have travelled between 34,000 and 55,000 km (depending on if the EV is European or foreign made). In one scenario, starting from Chile, the lithium can travel to the US, Japan, Korea, back to the US and then finally back to Europe due to the simple reason that so much of the battery value chain is scattered around the world. A more localised supply chain will help European automakers eliminate a significant portion of these excess emissions for European consumers and help Europe achieve its carbon emission targets .