As television ads from Audi unabashedly proclaim, the German carmaker, like its compatriots, did not invent the electric car, but is finally embracing it. Now that the European auto industry is belatedly weaning itself off the internal combustion engine, the EU’s so-called Battery Initiative, which it fleshed out this week, is to be commended. It aims to address a crucial issue for European automakers: the batteries needed to power the electric vehicles they are developing are mostly made in China. The risk, however, is that Europe is coming very late to the party.
Europe’s auto industry, employing 13m people, is a mainstay of its economy. Much of the industry’s advantage lies in its expertise in engines and powertrains. The shift to electric power threatens that competitive edge, especially if the centre not just of battery production but of innovation lies thousands of miles away.
Roughly 80 per cent of the world’s existing and planned battery production is in Asia, according to Bloomberg data. While Japan and Korea were early leaders, China now accounts for 69 per cent of capacity, the US 15 per cent and the EU less than 4 per cent. A quasi-monopoly for China in batteries would risk undermining Europe’s ability to compete with Chinese automakers. Beijing could, in theory, restrict future supplies. Asian manufacturers have already signed up much of the available supply of raw materials such as lithium and cobalt.