Battery Supply Chain Investments Surge Amid Chinese Dominance
European procurement teams face a critical challenge as the region commits nearly €200 billion to electric vehicle (EV) ecosystems, according to research from New Automotive. This includes €109 billion in battery supply chain procurement, up to €46 billion for public charging infrastructure, and €60 billion in manufacturing investments. The European Economic Area nations and Switzerland are driving this shift amid rising global demand and geopolitical tensions. Chinese companies currently manufacture nearly 70% of global EV batteries and supply battery cells for more than 80% of EVs worldwide, per the International Energy Agency (IEA).
“We are the first European carmaker to establish our own battery cell development and production,” says Oliver Blume, Chief Executive Officer of Volkswagen Group. “This step strengthens our position and independence in the global competition.”
Volkswagen’s PowerCo aims to build production capacity of up to 20 GWh, a key move toward reducing reliance on Asian suppliers. The company is part of a broader trend where European automakers are investing in domestic battery cell manufacturing to improve supply chain resilience. Despite progress, Europe still produces batteries for only about one in three EVs sold domestically, according to New Automotive.
Regional Investment Patterns and Manufacturing Shifts
Germany accounted for nearly 25% of the region’s total investment in EV infrastructure, followed by France at 18%. Spain and Portugal together contributed 12%. Nordic countries lead in EV adoption, with Norway topping the list in terms of EV sales share. Norway’s share of the total investment is 1.6%, while Sweden accounts for 3.8%, Finland 3.6%, and Denmark 0.8%. In December, the European Commission revised its plan to phase out internal combustion engine (ICE) vehicles, now setting a target for 90% of new car sales to be zero-emission by 2035.
Manufacturing is increasingly centered on repurposing legacy automotive plants and building new EV-specific facilities. Battery production is being co-located with vehicle assembly to reduce logistics risk and costs. This strategy is particularly strong in Germany and Spain. Tesla operates a €5.8 billion Gigafactory in Grünheide, Germany, with an annual capacity of 375,000 EVs. The company claims this facility is “its most advanced, sustainable and efficient facility yet.”
Charging Infrastructure and Supply Chain Resilience
Europe has established a globally leading position in manufacturing high-power charging infrastructure, with over €3.5 billion invested across the continent. Companies in Italy, Germany, and the Nordics are key suppliers of ultra-fast charging systems. Public roll-out commitments range from €23 billion to €46 billion. More than 1 million public charge points have already been deployed across Europe. ABB E-mobility, a global leader in EV charging, has deployed over 1 million chargers worldwide.
China remains the world’s largest EV market, with 11.3 million EV sales in 2024, accounting for 48% of its total vehicle sales. Between 2009 and 2023, China invested at least US$230 billion in EV R&D, including tax exemptions, infrastructure funding, and government procurement. Regulatory mechanisms like the “dual-credit system” have driven automakers to expand electrification. These incentives give Chinese suppliers a significant edge in cost and scale, challenging European procurement strategies.
Strategic Sourcing and Supplier Diversification
European procurement teams are now balancing sourcing between established Asian suppliers and emerging domestic manufacturers. While companies like CATL and LG Energy Solution are already operating in Europe, European-owned entities like Volkswagen’s PowerCo are building in-house capabilities. The report notes that gaps remain in cathodes, precursors, and parts of the mid-stream value chain, making full supply chain independence difficult in the short term.
The co-location of battery and vehicle production is a growing trend, signaling a shift from lowest-cost sourcing to supply chain resilience. This strategy is being adopted by both European OEMs and international manufacturers. Stellantis, for example, confirmed plans to produce the Opel C-SUV BEV in Spain in collaboration with Chinese EV maker Leapmotor, “leveraging the Chinese New Energy Vehicle ecosystem.”
Source: procurementmag.com
Compiled from international media by the SCI.AI editorial team.
