Inside Europe's €200bn Investment into EV Supply Chains

Countries in the European Economic Area and Switzerland have committed almost €200bn (US$232.7bn) to EV ecosystems. According to New Automotive, €109bn (US$127bn) of this targets the battery supply chain. The research group states that up to €46bn (US$53.5bn) has been allocated to public charging networks and €60bn (US$70bn) to manufacturing.

The battery supply chain remains dominated by Chinese manufacturers. According to the International Energy Agency (IEA), Chinese companies manufacture nearly 70% of the world's EV batteries and supply battery cells for more than 80% of EVs worldwide. China also controls a majority of the refining capacity for materials like lithium, with manufacturers including CATL and BYD leading production.

Europe now produces batteries for roughly one in three EVs sold domestically, New Automotive says. The research group notes that announced capacity could meet future demand if fully utilised.

Battery supply chain investment

Batteries represent the largest share of capital in the research. This covers mining, refining, materials, gigafactories and recycling. According to New Automotive's report, announced capacity could meet future demand if fully utilised.

Europe has strengths in cell manufacturing and downstream integration. However, gaps exist in cathodes, precursors and parts of the mid-stream value chain. The report notes that battery investments remain capital-intensive and subject to international competition, giving them the highest sensitivity to delays, downsizing or cancellation.

Asian battery manufacturers like CATL and LG Energy Solution have already established operations in the region. European-owned businesses like Volkswagen's PowerCo are beginning to design, develop and produce cells within the continent. "We are the first European carmaker to establish our own battery cell development and production," says Oliver Blume, CEO of Volkswagen Group.

"This step strengthens our position and independence in the global competition."

Manufacturing and supply localisation

Manufacturing of EVs in Europe centres on converting legacy automotive plants alongside selective new EV-only facilities, according to the report. Battery production is being co-located to reduce costs and manage supply risk. This is happening in established automotive regions like Germany and Spain, carried out by both European OEMs and international manufacturers.

Tesla operates a €5.8bn (US$6.7bn) Gigafactory in Grünheide, Germany with an annual capacity of 375,000 EVs. Stellantis has confirmed plans to manufacture the Opel C-SUV BEV with Chinese carmaker Leapmotor at a plant in Spain, "leveraging the Chinese New Energy Vehicle ecosystem".

According to the German Automotive Association, Germany manufactures half of all EVs made in Europe. Germany accounted for almost a quarter of the region's investment, New Automotive's research found. France made up 18% and Spain and Portugal together are responsible for 12%.

Nordic countries dominate Europe's EV adoption, according to the European Environment Agency. Norway leads the world in percentage of EV sales, with Denmark, Sweden and Finland also leading the market. However, Norway accounts for 1.6% of the total investment, Sweden for 3.8%, Finland for 3.6% and Denmark for just 0.8%.

Charging infrastructure supply chains

Europe has established a position in manufacturing high-power charging infrastructure, New Automotive's report states. More than €3.5bn is being invested across the continent in this manufacturing. Companies across Italy, Germany and the Nordics supply ultra-fast systems.

Public rollout of charging infrastructure has commitments estimated between €23bn (US$27bn) and €46bn (US$53.5bn). More than a million public charge points have been deployed across the region.

In December, the European Commission launched a plan to cut back its ban on ICE cars from 2035. The plan opts for 90% of new cars sold from that date to be zero-emission.

China's supply chain investments

China is the world's largest EV market. According to the IEA, 11.3 million EV sales occurred in the country in 2024, making up 48% of its total vehicle sales.

The country invested at least US$230bn in the research and development of EVs between 2009 and 2023, according to the Center for Strategic and International Studies. This funding covers government support including exemption from 10% sales tax, funding for infrastructure, R&D programmes for manufacturers and government procurement of EVs.

China has made regulatory changes such as the "dual-credit system". These push automakers to grow electrification and make EVs easier for consumers to obtain.