A new study by Mobility Global, commissioned by ACEA, finds that European battery production is not expected to meet demand created by localization requirements under the proposed Industrial Accelerator Act (IAA). The analysis assesses the battery supply chain’s readiness and the scale of local production required over the coming decade.
Under the proposed framework, localization requirements would be introduced in two phases. Six months after the text enters into force, around 2027-2028, batteries would need three EU-origin components, including battery cells. Three years after adoption, around 2030-2031, the requirement would rise to five EU-origin components, including cells, the battery management system (BMS) and cathode active materials (CAM).
Europe’s Battery Cell Capacity Seen at 306 GWh by 2032
Three scenarios across two phases still leave supply short; if the IAA enters into force in 2028, around 3 million cars may miss incentives.
Capacity grows, while the commercial-vehicle deficit continues to widen through 2032.
Mobility Global considered three scenarios, each with a different level of demand for European-made batteries. In every scenario, supply is not expected to catch up with demand, even as European battery cell production is projected to grow to 306 GWh by 2032.
Limited supply would therefore restrict how many cars qualify for “made in the EU” incentives. If the IAA enters into force in 2028, around 3 million cars could be unable to qualify for the associated incentives because of insufficient supply.
The challenge is expected to be more pronounced for medium- and heavy-duty commercial vehicles. The supply-demand gap for these vehicles is projected to widen through 2032, reaching 23 GWh. At that point, demand would be around four times the available European supply.
The study also points to deeper structural obstacles to battery localization. It concludes that the effectiveness of the IAA will depend not only on its localization requirements, but also on Europe’s ability to develop upstream capacity, competitive operating conditions and an investment framework capable of supporting production.
Source: acea.auto
