Europe is placing a high-stakes bet on battery manufacturing. With over 40 gigafactory projects underway, billions in investment committed, and ambitious EV adoption targets, battery production is central to Europe’s industrial revival, energy transition, and efforts to reduce foreign dependency. But there is a fundamental flaw: Europe’s gigafactory ambitions have outpaced its mineral supply chain.
The Missing Link: Minerals
A battery factory is not a standalone asset—it is the culmination of a complex, mineral-intensive value chain. Lithium, nickel, cobalt, manganese, graphite, copper foil, aluminium foil, electrolyte solvents, separator films, and specialty additives must all be available in reliable volumes. Without these materials, gigafactories are little more than expensive warehouses.
Lithium: The Critical Bottleneck
Lithium is Europe’s most urgent constraint. The continent has almost no lithium refining capacity and relies heavily on imported lithium salts, primarily from China. Without lithium hydroxide and carbonate, cathode production halts, and battery cells cannot be assembled.
Nickel, Cobalt, and Graphite: Structural Dependencies
Europe produces small amounts of nickel and cobalt, but refining capacity remains limited. Battery-grade nickel and cobalt sulfates are dominated by China, Indonesia, and a few global suppliers. Graphite, essential for anodes, is almost entirely controlled by China in both production and processing. Without domestic capacity, Europe remains structurally dependent on Asia for key battery materials.
Economic and Strategic Risks
Mineral scarcity drives price volatility, increasing production costs. European gigafactories operate at higher costs than Asian competitors, undermining industrial competitiveness. Investors hesitate due to supply uncertainty, and automakers face unpredictable pricing. Strategically, constrained battery supply threatens EV adoption, automotive emissions targets, and Europe’s broader climate goals.
The Path to Battery Sovereignty
Europe’s gigafactories can only succeed if structural changes secure the full value chain:
1. Expand Domestic Mining: Develop lithium, nickel, manganese, and graphite production to reduce foreign dependency and mitigate supply shocks.
2. Build Processing Capacity: Establish refining hubs for lithium, nickel, cobalt, manganese, and graphite. Processing is the core of battery sovereignty and industrial autonomy.
3. Secure Upstream Partnerships: Negotiate long-term offtake agreements with mineral-rich countries that prioritize sustainability and mutual benefit.
4. Invest in Recycling: Prepare for future supply by developing battery recycling infrastructure today. By the 2030s, recycling will provide significant volumes of critical minerals.
