According to Automotive News Europe, a report by consulting firm Dunne Insights for the European Initiative for Energy Security (EIES) suggests that European automakers must act swiftly and decisively to challenge China's dominance in the battery and electric vehicle (EV) sector and seek increased partnerships with non-Chinese companies.
The report states that traditional European automakers should embrace Tesla and leverage its growing influence in Europe. Dunne Insights believes that closely working with Tesla-assessing its battery supply chain, mineral processing, and recycling needs in Europe-could create opportunities for European companies. "The faster Tesla achieves cost efficiency and success in Berlin, the sooner it can shift more production from China to Europe, thereby increasing battery demand within the European market."
Beyond Tesla, the report urges European automakers to strengthen ties with Japanese and South Korean battery manufacturers to reduce reliance on Chinese batteries. "European firms should prioritize partnerships with Japanese and South Korean battery manufacturers, leveraging their reliability and aligned interests in the European market to gain proprietary technology and achieve economies of scale."
The report recommends that Europe invest €20 billion in joint ventures with South Korean and Japanese partners to build battery gigafactories in Europe. This initiative would contribute to Europe's €100 billion battery investment target between 2025 and 2035 to ensure "strategic autonomy."
Michael Dunne, CEO of Dunne Insights, stated in the report: "Europe cannot become a vassal state dependent on Chinese imports. The time for decisive action is now-to build an industry that leads the world, creates jobs, and drives innovation." The report highlights that Europe currently lags behind China by 7 to 10 years in battery technology and supply chains, with China's EV production surpassing the combined output of all other nations.
Furthermore, China's speed in developing and manufacturing EVs is twice that of European competitors. Thanks to rapid production, government subsidies, and close proximity to suppliers, the cost of producing an EV in China is 25% to 30% lower than in any other country.
Looking ahead, the report acknowledges that collaboration between European and Chinese companies may be "inevitable," but should be "strictly regulated." Europe should leverage its market access to secure technology, expertise, and investment from China. Chinese suppliers should only be allowed to sell and manufacture in the EU if they partner with European firms, transfer expertise, and create local jobs. Joint ventures could put Europe on equal footing with China, with European companies retaining at least 51% ownership to ensure control remains in European hands.
