Position: Sovereign through innovation in the battery industry

If the energy transition is to be successful, we need battery storage. However, Europe runs the risk of becoming heavily dependent on other regions when it comes to key technologies. According to the International Energy Agency, Chinese companies already control large parts of the battery value chain; well over half of the metals such as lithium, cobalt and graphite are processed in China.

Germany and the EU are still important locations for battery production and research. However, the German government has taken a decision that jeopardizes competitiveness and vastly reduces funding. From 2025, no new battery research projects will be funded by the Federal Ministry of Education and Research.

This is despite the considerable pressure European players are already under. China’s production volume for lithium-ion batteries alone could meet global demand. This market power is leading to a sharp fall in prices.

Doing something about this will take a strategic approach. Through innovation and the circular economy, Germany and Europe can reduce their dependencies. This is the only way in which they can continue to play a decisive role in battery value chains. Second-life batteries taken from electric vehicles are already in use in their millions in Europe and continue to perform well. Their circular use reduces the need for raw materials, new batteries and supply chains and cuts dependence on Chinese companies.

Germany and Europe must move quickly to ensure that the battery ecosystem does not suffer the same fate as the solar industry. There are three important areas for action:

Firstly, the German government must adopt a storage strategy that includes a central role for battery recycling. It is currently underestimating the benefits of recycled and second-life batteries.

Secondly, tendering and procurement should give preference to recycled and second-life batteries from Europe by attaching greater weight to qualitative criteria. The EU Net Zero Industry Act (NZIA) calls for the promotion of sustainable technologies to strengthen reuse and efficiency in the European battery industry and reduce its carbon footprint. Second-life batteries should therefore be defined as a compliance option in the EU implementation act and in the national implementation of the NZIA.

Thirdly, the German government urgently needs to strengthen research into innovative battery technologies and recycling processes in order to reverse the trend of recent years.

Germany can only remain competitive in the battery industry of the future with a circular economy and innovation.