EU launches 'battery booster' to support domestic battery production and reduce dependence on China

The European Commission last week launched a new 'battery booster', into which it will channel up to €1.5 billion from the Innovation Fund. The new instrument aims to support the European battery sector, which faces a difficult situation primarily due to its heavy dependence on China and competition from this global battery leader.

The European Commission stated in its strategy focused on developing the battery industry, published at the beginning of this year, that despite major efforts to build a domestic battery value chain, the EU has become a net importer of batteries. Battery imports into the EU were worth €28 billion in 2024 alone, of which €22 billion came from China. China currently dominates global battery production, accounting for more than an 80% share of total global capacity in 2024, for example.

"China has systematic dominance across the entire battery value chain and creates critical dependencies and supply chain bottlenecks in battery components and technologies. This enables it to raise input costs, reducing the competitiveness of European manufacturers, and to impose export restrictions, as it has done, for example, in the case of advanced battery technologies," the European Commission said in January, adding that this dependence on foreign technologies not only reduces the competitiveness of European industry but also affects the development of key applications for defence and energy security.

A practical outcome of the strategy is the newly created Battery Booster Facility, through which the EU will provide direct support in the form of interest-free loans to battery manufacturers. Supported projects will have to manufacture batteries for electric vehicles, although buyers may also use them for other purposes. Production must be located in the European Economic Area, with a minimum manufacturing capacity of 10 GWh.

"The maximum loan will be €500 million per project. We chose interest-free loans rather than traditional grants to promote sound capital management, encourage companies to commercialise products faster, and complement private-sector investment. Applicants will be assessed on the basis of their technical and financial maturity and their added value for the European economy," the Commission said.