Electromobility 2.0: How Asia and the United States are transforming supply chains

Global electromobility is on the verge of a profound change, significantly influenced by substantial investments in proprietary battery technologies by Asia and the United States. These developments will have far-reaching implications for the European electronics industry, which is having to hold its own in an increasingly competitive environment.

Asia’s pioneering role in battery technology

Asian countries, above all China, have dominated the production of battery cells for years. The “Battery Monitor 2024/2025” forecasts that global demand for batteries will increase to between 4.0 and 4.6 terawatt hours by 2030. The market is currently dominated by technically leading producers from Asia—especially from China, where there is considerable overcapacity, which is causing prices to fall worldwide. This is putting pressure on European manufacturers in particular, companies that are already struggling with higher production costs and uncertainties regarding the ramp-up of electromobility and electric drives.

This dominance is the result of massive investments in research, development and the expansion of production capacities. Chinese companies such as CATL and BYD have established themselves as global market leaders and are continuously setting new standards in battery technology and electric drives.

The United States is catching up

In recent years, the United States has stepped up its efforts to catch up in battery technology. The U.S. Department of Energy is providing around $43 million in funding for battery technology projects in the 2024 financial year as part of its Vehicle Technologies Office. The focus is on reducing manufacturing costs, improving safety and strengthening domestic supply chains for electric vehicle battery materials. These investments are crucial to further advance the combination of electric drive and autonomous driving and to accelerate the development of new mobility solutions.

These efforts are supported by substantial government subsidies and partnerships with industry to promote the development and production of batteries in Germany.

Impact on the European electronics industry

The increased efforts of Asia and the United States in battery technology pose considerable challenges for the European electronics industry:

Competitive pressure: European companies are facing more intense competition as both Asian and U.S. manufacturers increase their market share.
Supply chain dependency: China’s dominance in battery cell production means that European manufacturers are heavily dependent on Asian suppliers. This concentration harbors risks for security of supply and price stability.
Technology development: The rapid advances in battery technology in Asia and the United States require European companies to invest heavily in research and development in order to remain competitive.

Europe’s response: strategies to strengthen its own position

Europe has launched several initiatives to meet these challenges:

European Battery Alliance: Launched in October 2017, this alliance aims to make Europe a leading player in sustainable battery technology. It now has over 700 industrial partners and has initiated more than 100 major projects.
Legislation on critical raw materials: In November 2023, the EU introduced legislation to secure the supply of important raw materials within Europe. The aim is to reduce dependence on third countries and strengthen domestic production.
Investment in gigafactories: Despite Asia’s current dominance, Europe is planning to build its own large-scale factories for battery cell production to increase local value creation and reduce dependence on imports.

Looking to the future: solid-state batteries as an opportunity for Europe?

The development of solid-state batteries could become a decisive factor in the competition for electromobility in the coming years. While Asian companies have already made considerable progress in this area, European companies are increasingly turning to this technology.

Solid-state batteries promise higher energy density, shorter charging times and greater safety compared with current lithium-ion batteries. But it remains to be seen whether Europe can seize this opportunity. The production ramp-up is not in sight until 2030 at the earliest, as current studies suggest.

The question remains whether Europe can catch up in the global race with a strategic focus on solid-state technologies or whether it will continue to be dominated by imports.

Shaping the future

The race for battery technologies and the transformation of global supply chains are putting the European electronics industry to the test. But with foresight, investment and strategic partnerships, Europe can not only keep up, but also play a key role in the electromobility 2.0 era.