New approaches to the supply of raw materials in the European automotive industry

Demand for electric vehicles is rising, and established European car manufacturers have so far lagged behind, particularly in comparison with Asian manufacturers. One reason for this is that, when it comes to the production of batteries – the key technology behind electric car propulsion – European and German manufacturers have a pressing need to catch up in terms of expertise and innovation.

Currently, the majority of battery cells used in electric car batteries come from Asia. European attempts to counterbalance this have increased in recent years, but have not yet been met with great success. Local efforts to gain market share have recently suffered a severe setback following the insolvency filings of various EU battery manufacturers.

Rising demand for raw materials due to electric car production

Even if European manufacturers and suppliers manage to catch up with Asia’s technological and production lead, a fundamental problem remains: the difficulty of sourcing raw materials for battery production. Demand for raw materials is rising significantly due to the shift in production towards battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs), as well as ever-increasing battery capacities (see Figure 1). Due to a lack of domestic raw material sources in Europe, a large proportion of the required minerals must be imported.

_{Figure 1 - Source: Statista, 2026}

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Risks associated with the procurement of raw materials are increasing

The procurement of these raw materials is becoming a significant risk factor due to geopolitical tensions. Recent political developments and global protectionist tendencies have significantly exacerbated this factor. The high degree of fragmentation among raw material sources is a further reason for the increasing complexity and risks involved in procurement (see Figure 2).

Companies should therefore implement risk mitigation measures in the short, medium and long term, which can be summarised in three categories:

_{Figure 2 - Source: NOW, 2023}

Risk mitigation measures

Reorientation of strategic raw materials procurement

A key pillar in safeguarding production is the reorientation of strategic raw material procurement.

By diversifying the supplier base in a targeted manner, dependencies can be reduced and the company’s own network strengthened.
It is also advisable to enter into long-term contracts in order to avoid price volatility and support supply stability.
Partnerships and alliances are also an effective means of strengthening one’s own position.
Modern technologies such as artificial intelligence can be used, for example, to improve the accuracy of demand forecasts or to track the risk of supply disruptions.

Basic research: Development of alternative battery concepts

Research and development in battery technology are essential for manufacturers’ long-term success. It is important to take control of battery cell development, as some car manufacturers are already doing.

Another important aspect that should be given greater priority is basic research into alternative battery concepts that make greater use of locally available raw materials. A good example here is the solid-state battery. However, even simply substituting with alternative materials that are more readily available in Europe could help to counteract the difficulties in sourcing raw materials in the medium term. Lithium iron phosphate batteries and sodium-ion batteries are promising approaches; whilst they cannot yet compete with conventional lithium-ion batteries in terms of performance, their development should be pursued precisely for that reason.

Complete independence in terms of the raw materials used will probably never be achieved, but dependencies could be significantly reduced in future through further development of battery technology.

Reducing dependence on raw materials through recycling

The introduction of a circular economy and an increase in recycling rates represent a long-term solution to reducing dependence on raw material sourcing. With the Battery Regulation, the European Commission has already established obligations regarding the circular economy and recycling, to take effect in 2023. The regulation stipulates that newly manufactured BEV batteries must contain a specified minimum proportion of recycled materials such as cobalt, nickel and lithium (see Figure 3). These percentages will be gradually increased until 2036. From 2025 onwards, the carbon footprint of batteries must be disclosed.

_{Figure 3 - Source: Regulation (EU) 2023/1542 of the European Parliament and of the Council, 2023}

Example of use:
A battery’s second life

A lithium-ion battery reaches the end of its primary service life after around 1,000 charge cycles. With a remaining capacity of 70 per cent, it can be used in so-called second-life applications as a stationary energy storage system, thereby significantly extending its service life. Subsequent recycling of the raw materials enables cost savings and greater independence from raw material imports.

Battery recycling as a key component of a European circular economy

Leading research institutes identify local battery recycling and the reintroduction of raw materials into the production process as key building blocks for a European circular economy – and they confirm that the German and European plant engineering sectors are well-positioned to bring new and efficient recycling processes to market. An increasing proportion of recycled materials offers companies the opportunity to gain a long-term cost advantage over their competitors, as well as to reduce dependencies in procurement and the associated risks.

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