The Rise of BEVs in Europe: Current Status, Policy Measures, and the Role of Battery Technology in the Global Race for Market Dominance

This week's publication of the ACEA report on vehicle sales in Europe highlights the continued growth of Battery Electric Vehicles (BEVs), which now make up 14.6% of new car sales in the European Union (1), marking a sharp increase from previous years.

This growth reflects Europe’s strong regulatory framework aimed at cutting carbon emissions and promoting electric mobility, aligning with its ambitious climate goals.

However, Europe is not alone in this pursuit. The global race to dominate the BEV market is heating up, with other key players such as China, the United States, South Korea, and Japan deploying strategies tailored to promote BEV adoption and, more crucially, to support the development of advanced battery technologies, which are pivotal to the commercial success of BEVs.

BEV Market Status and Trends: The European Perspective

Europe has seen a surge in BEV sales, driven by stringent CO2 emissions targets and significant financial incentives. The European Union has enforced regulations that push automakers to reduce emissions by 55% by 2030 (compared to 1990), making BEVs a key solution. Germany, France, and the Netherlands have led the charge with generous consumer subsidies, while the EU has committed to installing 1 million public charging points by 2025 (Green Deal target).

Despite these efforts, challenges remain in the form of high upfront costs for BEVs and incomplete charging infrastructure, particularly in rural but also in urban areas. Moreover, Europe’s reliance on imports for critical raw materials used in battery production poses a long-term risk. To address this, the EU is advancing policies aimed at building a sustainable battery value chain domestically, including recycling measures embedded in the new Battery Regulation .

This article focuses mainly on my claim that the further development of battery technologies in the different regions will be the most decisive factor in the race for global BEV market dominance and my wish that there will remain global technical and commercial competition for long time without domination by any region. This would in my opinion be good for the customers, but also for keeping an enormously productive and economically important global automotive eco-system.

Global Policy Measures to Promote BEVs

Other regions are also taking significant steps to foster BEV adoption, with each country or region focusing on its specific competitive advantages.

1. China

China, as the world’s largest BEV market, has pursued both demand-side and supply-side measures. Early policies, such as the New Energy Vehicle (NEV) policy, mandated a certain percentage of vehicles to be electric, driving massive demand. More recently, China has begun to emphasize the development of advanced battery technologies, shifting toward performance and safety improvements. China also dominates global battery production, with companies like CATL and BYD leading the way, and it is focusing on technologies like solid-state batteries and lithium-sulfur batteries. (2,3)

2. United States

The U.S. has adopted a mixed approach, balancing the reshoring of manufacturing with boosting demand through policies like the Inflation Reduction Act (IRA). The IRA offers tax credits of up to $7,500 for BEV purchases, emphasizing domestic production of vehicles and batteries. Additionally, the U.S. has allocated $7.5 billion to expand its charging infrastructure and aims to build a nationwide network of 500,000 public chargers by 2030. The U.S. is also heavily investing in next-generation battery technologies, including solid-state and lithium-metal batteries. (2,3,4)

3. South Korea

South Korea is a key player in the battery sector, with companies like LG Energy Solution and SK Innovation driving global production. The government’s K-Battery Development Strategy emphasizes the commercialization of advanced battery types, such as solid-state and lithium-sulfur batteries. South Korea is focusing on maintaining its leadership in battery technology, aiming for early commercialization by 2027. (2,3,4)

4. Japan

Japan, traditionally a leader in battery technology, is placing renewed focus on expanding its battery production capabilities. Under its Battery Industry Strategy, Japan is investing in advanced battery R&D, particularly solid-state batteries. However, Japan is also pursuing alternative battery technologies, such as fluoride shuttle and zinc-anode batteries, and has set ambitious targets for production and recycling. (2,3)

The Critical Role of Battery Technology

The further development of battery technology will be the most decisive factor in the race for global BEV market dominance. Battery advancements impact key consumer concerns—range, charging time, cost, and sustainability—and will ultimately determine which regions dominate the market.

1. Energy Density and Range

Battery energy density is critical for extending the range of BEVs, which is a major consumer concern. While current lithium-ion technology offers ranges of 300-500 kilometers, next-generation solid-state and lithium-sulfur batteries promise to significantly increase energy density, enabling ranges of 600 km or more. Countries that lead in these advancements will be able to offer BEVs with greater range, addressing “range anxiety” and improving competitiveness with ICE vehicles. (2,4)

2. Charging Speed

Fast charging is essential for widespread BEV adoption. Innovations in silicon-anode and solid-state batteries are expected to reduce charging times to under 10 minutes, making BEV charging more comparable to gasoline refueling. This development, coupled with the rollout of high-power charging infrastructure, will be critical for commercial success. (2,3)

3. Cost Reduction

Battery costs represent a significant portion of BEV prices, accounting for around 30-40% of the vehicle’s total cost. To achieve price parity with ICE vehicles, battery costs need to fall to around $100 per kWh, a target that experts believe can be met by 2030 through innovations in solid-state and lithium-metal batteries. (2)

4. Sustainability and Recycling

The sustainability of BEVs hinges on developing efficient battery recycling systems. The EU’s Battery Regulation sets ambitious targets for recycling efficiency, aiming to recover 90% of critical materials by 2030. Other regions, including Japan and South Korea, are following suit with their own recycling initiatives. (2)

Policy Approaches to Battery Technology

Different regions have adopted varying strategies to foster battery technology, balancing supply-side innovation with demand-side incentives.

? China is focusing on scaling up production while pushing for advancements in safety and sustainability. China’s policies emphasize building a complete domestic value chain for batteries, from raw material extraction to end-of-life recycling. (2)

? The U.S., through the IRA, is encouraging domestic production with substantial incentives. The U.S. government aims to establish leadership in next-generation battery technologies while securing critical mineral supplies through partnerships and innovation. (2)

? South Korea is leveraging its existing battery industry to maintain a competitive edge. Its government is directly supporting advanced battery R&D and the early commercialization of solid-state and lithium-sulfur batteries. (2)

? Japan is focusing on technological leadership by investing heavily in solid-state and alternative battery technologies, with a particular focus on future-proofing its battery production capacity. (2)

A Call for Inclusive Growth in the Global Mobility Industry

As competition between regions intensifies, there is a growing concern that this race for dominance could lead to an oligopolistic market structure. While it is critical for nations to secure leadership in BEV and battery production, it is equally important to foster an open and competitive market. Innovation thrives when multiple players are allowed to participate, offering consumers more choices and driving down costs through competition.

Moreover, global cooperation on issues like battery recycling, sustainability standards, and supply chain transparency will ensure that the BEV market grows sustainably. Policies should aim to foster a vibrant ecosystem where startups and smaller players can innovate alongside established automakers and battery manufacturers. Ultimately, this will benefit both consumers and the global effort to combat climate change, creating a dynamic and inclusive industry.

Do you agree on the importance of the competition on battery technology for the future of the automotive industry in the different regions?

Sources:

1. ACEA, “New car registrations: +13.7% in April 2024; battery electric 11.9% market share”

2. Fraunhofer ISI, “Benchmarking International Battery Policies 2024: A cross analysis of international public battery strategies,” January 2024

3. IEA, “Global EV Outlook 2023 – Analysis”

4. Innovation Reform, “U.S.-China EV Battery Competition and the Role of South Korea”