Europe is awash with announcements about battery gigafactories, electric vehicle assembly lines, and strategic investment platforms meant to secure the future of mobility on the continent. Governments highlight large-scale projects, automakers promote ambitious EV strategies, and policymakers speak confidently about technological sovereignty and a new industrial renaissance. To many observers, it appears that Europe is well on its way to building a fully autonomous electric vehicle ecosystem.
Yet behind this optimistic narrative lies a deep structural contradiction. While Europe is rapidly expanding downstream manufacturing, it remains heavily dependent on Asian—especially Chinese—midstream processing. This dependence quietly undermines the very sovereignty Europe claims to be building.
Batteries Are Chemical Systems, Not Just Factories
Batteries are often portrayed as products of advanced assembly lines, but their true complexity lies elsewhere. At their core, batteries are chemical systems built on precisely processed materials and high-performance intermediates. The real engine of the EV economy is not assembly capacity—it is conversion capacity.
Nickel must be converted into nickel sulfate. Lithium must be refined into battery-grade chemical feedstock. Graphite must be processed into high-purity anode material. Cathodes rely on precursor chemicals that require sophisticated chemistry, large-scale capital investment, and operational depth. These conversion steps are the most critical—and they are overwhelmingly concentrated in Asia.
This is where Europe’s battery paradox becomes clear: industrial leadership in EVs depends on controlling midstream processing, and Europe largely does not.
The Midstream Dependency Problem
The case of natural graphite illustrates the imbalance most starkly. Despite Europe’s ambition to lead electric mobility, it remains almost entirely dependent on Chinese midstream processing for anode materials. Nickel chemistry follows a similar pattern, with most large-scale conversion taking place outside Europe. Lithium refining capacity within the EU remains limited, while cathode precursor materials overwhelmingly originate from Asian industrial ecosystems.
No matter how advanced European gigafactories become, they cannot compensate for this structural reality. Europe is effectively building sophisticated manufacturing facilities whose most critical inputs are controlled elsewhere. These factories depend on chemical lifelines that lie beyond European influence.
This dependency forces a fundamental question: what does industrial sovereignty actually mean? If Europe must import its most critical processed battery materials, its EV industry remains exposed to price volatility, supply disruptions, and geopolitical risk. Ownership of factories, skilled labor, and intellectual property does not equate to control if the conversion phase—the foundation of the value chain—is external.
In such a system, Europe risks becoming strategically subordinate despite its technological sophistication. Industrial policy becomes constrained by foreign processing dominance, not domestic capability.
China’s Strategic Advantage and Europe’s Exposure
This risk is not theoretical. The global competition for critical raw materials has already shown how export controls, regulatory shifts, and state-driven industrial strategies can reshape markets rapidly. China understands its position well. Its dominance in battery processing was built deliberately over decades, and it fully recognizes the leverage this provides.
For Europe, continuing to scale EV manufacturing while remaining dependent on imported midstream inputs is not a neutral economic arrangement. It is a structural vulnerability. European EV producers remain price-takers rather than price-setters, long-term investment risk increases, and the vision of a sovereign EV industry starts to resemble a refined outsourcing model.
While governments celebrate gigafactory announcements, investors look deeper. Capital markets assess the security, stability, and resilience of the midstream supply chain. If refined battery materials remain outside European control, the continent’s EV ecosystem remains fragile.
Europe may succeed in expanding manufacturing volumes, yet still fail to secure the industrial independence needed for sustained competitiveness, employment stability, and long-term technological leadership.
Building the Missing Layer of Europe’s Battery Strategy
Overcoming the battery paradox requires political and industrial courage. Europe must engage seriously with the challenge of building chemical refining plants, conversion facilities, and intermediate material production on its own soil or within deeply trusted partner countries. These projects are less visible and less politically attractive than EV assembly plants, but they are far more strategic.
They require affordable energy, predictable permitting, industrial pragmatism, and an acceptance that sovereignty comes with real industrial responsibilities. Without this midstream layer, Europe risks constructing an impressive industrial façade resting on foundations controlled by others.
Europe is undoubtedly building the vehicles of the future. But unless it confronts the unseen processing layer beneath them, it will not control the system that powers them. That is the essence of the battery paradox. Without midstream sovereignty, Europe’s EV ambition remains incomplete—and its industrial destiny remains, at least in part, in someone else’s hands.
