Europe's battery industry, green industrial policy face challenges

(MENAFN) The recent stagnation in Europe's battery sector highlights significant flaws in the EU's approach to fostering green industrial growth. Despite acknowledging the strategic importance of bolstering domestic economic capabilities for geopolitical autonomy, European leaders have struggled to effectively support their stated objectives.

Batteries have been a notable success within the broader framework of the EU's industrial strategy. Designated as "important projects of common European interest" by the European Commission, they have received substantial public backing to facilitate manufacturing endeavors. Consequently, numerous battery factories have sprung up across Europe, both indigenous and as subsidiaries of Chinese and Korean firms. Initial projections foresaw robust capacity expansion, yet recent developments indicate a notable setback.

The abandonment or substantial scaling back of European battery projects suggests systemic challenges, distinct from Europe's well-documented technological, raw material, and energy supply bottlenecks. The primary issue lies in sluggish electric vehicle (EV) sales, which have undercut anticipated demand for increased battery production. This predicament underscores a broader crisis of confidence in the private sector, questioning the ability of political leaders to translate ambitious rhetoric into effective action.

European policymakers have committed to phasing out internal combustion engines and shielding domestic automakers from an influx of Chinese imports. However, the failure of EU automakers to significantly boost investment in meeting the forthcoming demand for approximately 10 million electric vehicles annually reveals a deep skepticism about political promises being fulfilled. This skepticism not only impacts the battery sector but also reverberates throughout the entire supply chain, amplifying concerns about the EU's industrial strategy's feasibility and efficacy.

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