Mobility ecosystem : lithium-ion batteries.
Date: 2024-08-09
Institutions: Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs
Subjects: EU strategy, energy storage, industrial cooperation, innovation, lithium, reduction of gas emissions, research and development, small and medium-sized enterprises, soft energy, strategic autonomy, sustainable mobility, value chain

MOBILITY  

ECOSYSTEM: 

LITHIUM-ION 

BATTERIES

DEFINITION

Lithium-ion  batteries  (or  other  batteries  using  similar  chemistries)  are 
devices for energy storage and deployment. Within the mobility ecosystem, 
they are employed as clean alternatives to traditional internal combustion 
engines for the reduction of CO2 emissions.

SME SIGNIFICANCE 

NUMBER OF SMEs IN THE 
EU27 VALUE CHAIN 

SHARE OF SMEs 
OVER TOTAL

ca. 660 active in the manufac-
turing of batteries and accu-
mulators (NACE C27.2)

99%

EMPLOYMENT BY SMEs

16% of personnel

ADDED VALUE OF 
SMEs OVER TOTAL

48%

LITHIUM-ION BATTERIES 
EU VALUE CHAIN 

PHASE 1 
RAW AND RAW MATERIALS  

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The EU’s import reliance ranges from 86% for cobalt to 100% for natural 
graphite.  Battery-grade  material  refining  is  mostly  concentrated  in 
China (60% of the total global production for refined cobalt and 93% 
for graphite-active materials).
EU primary production ranges from 0.1% of the global total for lithium, 
manganese and natural graphite, to 1.7% for nickel
EU Member States have some mining capacity for lithium (Germany, 
Czechia,  Spain,  Austria,  Poland,  Portugal),  nickel  (Greece,  Finland, 
Sweden)  and  cobalt  (Finland,  Portugal,  Sweden,  Spain)EU  Member 
States have some refining capacity for nickel (Finland and Greece) and 
cobalt (Finland and Belgium).

PHASE 2
CELL MANUFACTURING

The majority of firms operating in this phase of the value chain are non-
European (e.g. CATL and Semcorp from China, Toray from Japan, Samsung 
SDI and LG Chem from Korea).
The EU foresees an increase in production capacity from 175GWh in 2023 
to 1,600GWh in 2030, with 43% of the expected production coming from 
EU capital-backed firms, such as Swedish Northvolt.

•  Cell  manufacturing  is  concentrated  in  Central  European  Countries: 
Germany, Poland, Hungary, and France, with some capacity in peripheral 
Member States: Sweden, Spain, and Italy.
The high costs required for scaling production make the involvement of 
SMEs  in  this  phase  more  difficult.  SMEs  are  mostly  involved  in  support 
activities, R&D, pilot lines testing, and supply of specialised machinery. 

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PHASE 3
END-USE APPLICATIONS

•  Around 70% of battery applications are for mobility.
• 

In mobility, the sector is mainly dominated by a few original equipment 
manufacturers (Tesla, Volkswagen, Stellantis, etc.).
SMEs are more active in the e-bikes segment. 

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PHASE 4
RECYCLING AND SECOND-LIFE USE

SMEs constitute the first point of contact for electric vehicle owners 
when batteries need a repair or a replacement.
SMEs are more likely involved in mechanical recycling (e.g. disassembly 
system for battery packs) rather than metallurgical recycling (i.e. 
recovery of metals from batteries), which is machinery-intensive and 
requires significant upfront investment.

STRENGTHS AND VULNERABILITIES

EU STRENGTHS

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The EU has a strong and developing network thanks to the European Battery 
Alliance, which fosters collaborative efforts and makes access to funding 
opportunities easier, especially among SMEs.
There already exists an extensive body of policy aimed at supporting 
this industry, both at the national and European levels as part of the green 
transition.

•  Battery manufacturers can rely on an already established and competitive 
automotive industry with some key global players (Stellantis, Volkswagen, 
Renault) that are pushing for the electrification of mobility. 

EU VULNERABILITIES

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There is limited EU production capacity in the upstream segments of 
the value chain due to critical raw materials and refining capacities being 
concentrated outside of the EU, such as China, Chile, Congo, South Africa and 
Australia.
The majority of cell manufacturing capacity is in the hands of subsidiaries of 
non-EU companies.
Tier-2 and Tier-3 automotive suppliers, which are most likely to be SMEs, 
depend a lot on legacy technologies such as internal combustion engines and 
lack the funds and expertise to readily convert their businesses towards the 
electrification of the sector.
Lack of workers with the necessary skills to contribute to cell manufacturing.

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•  Due to the capital-intensive nature of cell manufacturing, SMEs have little 

capacity to provide directly contribute.

EXAMPLES OF POLICY MEASURES INTRODUCED 
TO ENHANCE OPEN STRATEGIC AUTONOMY

EU

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Two  IPCEIs  (Important  Projects  of  Common  European  Interest)  involving  17  and 
42 companies from seven and 12 Member States, respectively, for a total funding of 
EUR  6.1  billion.  The  IPCEIs  involve  R&D  and  first  industrial  deployment  activities  for 
the different phases of the value chain: raw and advanced materials research, battery 
cells, battery systems, and recycling. SMEs are involved in the IPCEIs in several ways, 
ranging from access to facilities for testing to knowledge-sharing for the development 
of advanced materials, and from supply of products for production in gigafactories to 
involvement in pilot lines for R&D&I.
The  Innovation  Fund,  financed  through  the  revenues  of  the  European  Emission 
Trading System (ETS), supported eight projects since 2021, worth a total of EUR 354 
million,  with  5  out  of  14  participants  being  SMEs.In  December  2023,  the  European 
Commission announced a dedicated instrument for the battery value chain under the 
Innovation Fund, possibly amounting to EUR 3 billion over three years.
The European Innovation Council operating under the EU Horizon Europe programme 
provides funding opportunities of up to EUR 2.5 million in grants and EUR 15 million in 
equity for carefully selected SMEs and start-ups developing cutting edge innovations.
In  December  2023,  the  European  Commission  announced  a  new  pilot  initiative  to 
provide a one-stop shop service for guidance to SMEs in the battery industry to access 
to EU finance.
The 2023 battery waste regulation  aims to ensure that batteries have a low carbon 
footprint,  use  minimal  harmful  substances,  need  less  raw  materials  from  non-EU 
countries,  and  are  collected,  reused  and  recycled  to  a  high  degree  in  Europe,  thus 
increasing the security of supply for raw materials and energy, and enhancing the EU’s 
strategic autonomy.
Through the Pact for Skills, the EU is supporting several projects to develop a skilled 
workforce in the sector. Examples include Albatts, Drives, and the Automotive Skills 
Alliance.

MEMBERS STATES

•  Sweden provides credit guarantees for green investment.
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Finland  has  established  a  national  battery  strategy.  However,  due  to  the  capital-
intensive nature of the battery value chain, SME-specific measures are lacking.

EXTRA-EU

•  China: Massive public subsidies to electric vehicle and battery manufacturers (e.g. for 
carmaker BYD which is estimated to have received more than EUR 2 billion) as part of 
the green-tech strategy.

•  USA: the Inflation Reduction Act (IRA) provides tax credits for companies developing 
green technologies involving batteries. Some European battery companies (e.g. Freyer) 
see the IRA subsidies as more attractive and are moving to the US.

POLICY RECOMMENDATIONS TO MAXIMISE 
SME OPPORTUNITIES AND REDUCE RISKS IN 
OPEN STRATEGIC AUTONOMY
The one-stop-shop service for SME funding from EU institutions could also incorporate 
Member State funding initiatives to avoid information fragmentation. This would allow 
European  SMEs  to  become  acquainted  with  what  type  of  funding  is  available  across 
Member States through this simple one-stop-shop.

In the automotive sector, where several suppliers will be required to shift their production 
focus to support electro-mobility, mid-caps will play a key role as enablers of this 
transition, connecting car manufacturers with tier-2 suppliers. However, opportunities 
for  access  to  funding  for  mid-cap  firms  are  limited,  and  it  is  important  to  ensure 
that mid-cap firms involved in this transition are able to access the required funding 
opportunities, for instance, through equity funds at the European Investment Bank.

Individual SMEs often do not have the capacity or resources to engage with EU-level 
business  associations  and  alliances.  Hence,  local  authorities  and  collaboration 
clusters  could work as liaising points between the supranational and regional levels 
since  they  represent  easier  access  points  for  SMEs.  Engagement  could  also  take  a 
more hard-policy approach, whereby policy-makers could incentivise the larger battery 
manufacturers to purchase equipment and enter in commercial agreements with local 
suppliers. Such an approach could be particularly relevant to boost cluster policies in 
the battery and automotive ecosystem, especially in cases where the local supply chain 
is experiencing a crisis period.

European and national legislators could promote and share with SMEs best practices 
about how automotive SMEs can expand into new areas by diversifying production and 
not be left behind by holding onto legacy technologies. SMEs in mobility could also shift 
towards niche applications or supply machinery to other companies involved in battery 
production.

Some public efforts could be put into assisting companies in ensuring that their products 
are compliant with the new Battery Regulation, such as calculation of the carbon 
footprint and labelling requirements, while reducing the burden on SMEs.

Data sources:
Data on mining and refining capacity comes from the Raw Material Information System and 
IPCEI studieS
• Build-up of the battery industry in Europe – Status quo and challenges
• The importance of regional value creation structures in the battery industry. 
Data on the number and share of SMEs in the sector comes from Eurostat
Data on Chinese subsidies comes from a KIEL Policy Brief
US measures exist both at the federal and state levels. For a more thorough list of measures 
at the federal level, which addresses both battery- and fuel cell-powered vehicles, see: https://
afdc.energy.gov/laws/fed_summary. 

© European Union, 2024
Authors of the study: CSIL, IDEA Consult, PPMI, LSE Consulting – Trade Policy Hub. 

This document has been prepared for the European Commission, however, it reflects 
the  views  only  of  the  authors,  and  the  European  Commission  is  not  liable  for  any 
consequence stemming from the reuse of this publication.

Luxembourg: Publications Office of the European Union, 2024
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