Summary
- No EU-wide or national requirements on technology transfer in battery factories in Poland and Hungary
- Calls for clear foreign investment rules and an EU strategy for battery supply chains
- Concerns about environmental conditions in Chinese and South Korean battery plants in Hungary and Poland
- Lack of technology transfer requirements in recent partnerships between European carmakers and foreign battery companies
- Recommendations include asserting local control, defining an EU-wide foreign investment framework, and staying united against foreign pressure.
Article
The European Union’s ambition to develop a leading battery industry is facing challenges as over 90% of electric car and storage batteries in the EU are produced by South Korean and Chinese companies. Concerns arise over the environmental and social conditions in some facilities, such as the CATL battery plant in Hungary. European carmakers are forming partnerships with foreign battery companies to secure the supply, raising questions about whether this will enable the EU to gain the expertise it lacks in the battery industry.
A study commissioned by Transport & Environment (T&E) analyzed environmental and social conditions in the CATL battery plant in Hungary and the LG Energy Solutions plant in Poland, as well as technology transfer arrangements in battery partnerships. Both facilities received substantial state aid subsidies but breached EU air pollution rules, highlighting environmental concerns. The study also examined partnerships such as VW-Gotion in Germany and CATL-Stellantis in Spain, finding no requirements on technology transfer or local content in these joint ventures.
Europe is lacking the technology and manufacturing expertise necessary to become a leader in battery production, raising concerns about geopolitical, economic, and security risks. Despite an abundance of global battery supply, the region may become reliant on foreign battery manufacturers, leading to the risk of becoming merely an assembly plant. Policy recommendations include asserting more local control and content requirements in battery manufacturing, defining an EU-wide framework on foreign investment, and staying united as EU countries to protect technology.
T&E calls for the use of various tools to require onshoring of battery manufacturing on terms set by the EU, including conditions to state aid, sustainability requirements, and trade tools. They also emphasize the need for an EU-wide framework on foreign direct investment, prioritizing local ownership and decision-making rules. Staying united as EU27 against foreign pressure to protect technology is crucial to ensure Europe’s competitiveness in the battery industry. By implementing these policy recommendations, the EU can work towards building a strong domestic battery industry and reducing reliance on foreign manufacturers.
Overall, the study highlights the challenges and opportunities facing Europe in developing a competitive battery industry. With the right policy measures and investments, the EU has the potential to become a leader in battery technology and manufacturing. However, addressing environmental and social concerns, as well as ensuring technology transfer and local content requirements in partnerships, are essential steps towards achieving this goal. By taking proactive steps to assert control over its battery supply chain, Europe can work towards becoming a powerhouse in the clean energy transition.
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