Over the past decade, the global shift toward electric mobility has transformed the battery industry into one of the most strategically critical sectors of the 21st century. For Europe, this transformation has arrived not as an opportunity alone, but as a structural challenge – one shaped by climate ambition, industrial vulnerability, and geopolitical dependence.
Europe today faces immense pressure to decarbonise its automotive sector, driven largely by strict climate laws and policy targets set by the European Union (EU), such as the European Green Deal and Fit for 55. These initiatives aim to make the EU climate-neutral by 2050 and reduce greenhouse gas emissions by at least 55% by 2030. Within the automotive sector, these regulations impose significant penalties on manufacturers that exceed CO2 limits, while the long-term trajectory is even more restrictive: by 2035, the EU requires that all new cars and vehicles sold must have zero tailpipe CO2 emissions.
This regulatory push has accelerated a rapid industrial transition and puts heavy pressure on the automotive sector to produce and sell an overwhelming volume of Electric Vehicles (EVs). This economic dynamic also includes the end of the era where European automakers made massive profits by exporting premium gasoline cars, like BMW, Mercedes, and Audi, to China’s growing middle class due to a rapid shift of Chinese domestic consumers to more affordable EV brands like BYD and Geely.
China’s cost advantage extends far beyond manufacturing efficiency, it is built on state-led control over critical minerals that power the global EV industry. Resource-rich areas across the country, including Jiangxi, Sichuan, and the strategically vital Tibetan Plateau, supply the massive quantities of lithium, copper, and graphite required for battery production. By combining large-scale extraction in these mineral hubs with low regional labor and processing costs, China slashes production expenses, enabling Chinese manufacturers to produce EVs at prices often two to three times lower than those in export markets.
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Today, Europe’s automotive industry is facing a slow but steady erosion on a global scale, in large part due to intense competition from Chinese exporters. The European policymakers responded with interventionist measures to rebuild domestic capacity – most notably through the Industrial Accelerator Act and its “Made in Europe” mandate, which requires that 70% of a vehicle’s value be sourced within Europe. However, unlike internal combustion engine cars, EVs are fundamentally battery-centric, which constitutes around 30-40% of the vehicle’s total value. This reality has placed European automakers under mounting pressure. Volkswagen, Stellantis, and Renault lobbied against the strict mandate, arguing that the target was unrealistic because their batteries are heavily dependent on supplies from other countries, especially China, and that forcing strict localisation too quickly would raise production costs, thereby making European EVs even more expensive than Chinese imports.
In response, the EU Commission did not fully abandon the mandate. Still, it made it more flexible with the gradual implementation of targets, incentives rather than a strict mandate, and investments in building battery giga-factories and partnerships inside Europe. Against this backdrop, battery gigafactories such as Contemporary Amperex Technology Thuringia GmbH (Germany) and Contemporary Amperex Technology Hungary Kft. (Hungary) have been established under the parent company, Contemporary Amperex Technology Co. Limited, a Chinese multinational and one of the world’s largest manufacturers of EV batteries.
On paper, these projects represent the success of Europe’s localisation strategy; however, this strategy raises a critical concern: while these facilities are located in Europe, the technology, ownership, and much of the value chain remain firmly Chinese. Even when production capacity improves, the underlying dependency does not disappear. Profits, intellectual property, and strategic control ultimately flow back to the parent companies in China. In effect, the “Made in Europe” label risks becoming a geographic rebranding of a supply chain that remains dominated by external players.
More broadly, this development reveals underlying tensions within the EU’s green transition: while the push for electric vehicles aims to reduce dependence on fossil fuels, it has also exposed fragmented industrial policies and intensified competition among member states to rely increasingly on Chinese firms for critical battery technologies. By building massive local gigafactories, utilizing strategic joint ventures, and leveraging generous European state subsidies, Chinese EV giants systematically embed themselves directly into the European supply chain. This gradual, localized expansion allows them to effortlessly bypass incoming EU import tariffs and permanently outpace domestic automakers from within their own borders
Europe’s approach to the green transition is commendable in many ways, as it has taken more consistent and ambitious steps on climate policy than many other major economies. The challenge of Europe is not the green transition itself, but rather the increasing reliance on a single country, China, for critical technologies. So, the question is not whether their partnerships create jobs, sustain local economies, or generate short-term industrial activity – they clearly do. The deeper question is whether they translate into industrial and technology capability, or ultimately reinforce a new and more sophisticated form of dependence.
