Europe is building up significant battery and electric vehicle (EV) manufacturing capacity, largely driven by foreign investment. Batteries and EVs contribute to Europe’s energy security, climate policy, and industrial strategy. Stationary batteries stabilize electricity grids, while EV adoption reduces reliance on imported oil and cuts road transport carbon dioxide emissions. These technologies accounted for two-thirds of the $700 billion global clean technology market in 2023, highlighting their importance.
In the United States, investment in battery and EV manufacturing exceeds other clean-tech investments. The European Union is shaping domestic battery and EV markets through policy. Regulations limiting fleet-wide carbon emissions from new cars and vans have boosted EV supply and uptake. Significant fiscal support at national and European levels has attracted battery and EV manufacturing investment. Meanwhile, the EU has imposed tariffs on Chinese-produced EVs, while European EVs face higher US tariffs. These investments show an industrial transformation alongside the clean energy transition.
Since January 2017, companies have invested €38 billion in European battery manufacturing facilities and €34 billion in electric vehicle facilities. These investments have led to the capacity to produce 4.6 million electric vehicles and 251 gigawatt hours (GWh) of battery cells annually. This compares to 2024 annual demand of 2.3 million electric vehicles and 410 GWh of batteries, indicating that European factories have the capacity to produce twice as many EVs as domestic demand and meet approximately two-thirds of domestic battery cell demand.
A proper evaluation of investments should consider both delivered capacities and their utilization. Production data is closely guarded by industry, but trade data offers an approximation. The EU imports batteries and exports electric vehicles. In 2024, net exports of EVs from the EU were worth €14 billion, while net imports of batteries amounted to €17 billion. The main destinations for EU EV exports over the past five years have been the United Kingdom, the US, Türkiye, Norway, and Switzerland. The EU’s position as a net exporter of EVs is threatened by the August 2025 EU-US joint agreement, which set a 15 percent tariff on US vehicle imports, leading to a substantial drop in EV exports to the US.
Foreign Direct Investment and EU Battery Manufacturing Capacity
Foreign direct investment, particularly from South Korea, has been crucial for building EU battery manufacturing capacity. Three companies own four-fifths of operational battery cell manufacturing capacity in Europe. LG Energy, SK Innovation, and Samsung SDI have made significant investments in Europe’s largest battery cell manufacturing facilities. While South Korean investment has slowed, substantial Chinese investment is arriving. CATL, a Chinese company and the largest car battery producer worldwide, began construction in Hungary of what may become Europe’s largest battery cell facility with a potential capacity of 100 GWh/year and investment reaching €7.3 billion.
The EU has tried to develop home-grown battery champions. Northvolt’s €4 billion investment in Sweden secured a $5 billion loan to expand the site. While Northvolt subsequently declared bankruptcy, the 16 GWh Skellefteå plant began operations and is being sold to a US firm. France is home to two other European-owned operational battery cell facilities. Verkor operates an 8 GWh facility in Dunkirk, while the Automotive Cells Company joint venture runs a 13 GWh plant in Douvrin. Further projects are under construction by PowerCo and Volvo.
Electric Vehicle Manufacturing in Europe
For electric vehicles, foreign companies are less dominant. Established European automakers, including Volkswagen, BMW, Renault, and Stellantis, own most EV capacity. Volkswagen completed the €1.2 billion conversion of its Zwickau facility to produce only electric models and began a €1 billion electric retrofit of its Emden plant. The largest single EV investment in Europe is the €5.8 billion by Tesla in their facility in Grünheide, Germany, with the capacity to assemble 375,000 EVs annually. Chinese company BYD is building a €4 billion facility in Hungary, with an expected annual capacity of 150,000 once complete.
Since 2017, Germany has attracted the largest volume and number of investments in EVs and batteries in Europe. However, in 2025, Hungary and Spain are Europe’s leading investment destinations. Investment in Hungary comes predominantly from Chinese companies, including CATL, BYD, Eve Energy, and EcoPro. In Spain, Volkswagen Group is driving ongoing investments, including a potentially 40 GWh battery cell plant in Sagunto and preparations for EV production in Navarre and Pamplona. Poland and Hungary are currently leading in battery cell production capacity, together accounting for over two-thirds of European capacity. Germany is far ahead of any other European country in terms of EV capacity, with Spain and France ranking next.
EU Industrial Base and Climate Policy
The EU now boasts a solid industrial base for the manufacturing of both batteries and EVs. This base can already meet a large part of domestic battery demand, and the EU has become a net exporter of EVs. EU vehicle CO2 limits have been crucial for establishing stable demand expectations. Any proposal to weaken the EU’s 2035 deadline for CO2 limits should be rejected. This weakening would unfairly penalize companies that have already invested billions of euros into EV and battery production and would discourage future investment. It would impede the core objective of the Clean Industrial Deal and harm the long-term competitiveness of the EU car industry. It would also seriously undermine Europe’s reputation as a global climate leader.
La inversión extranjera ha sido responsable de la mayoría de las inversiones en baterías, inicialmente de empresas coreanas pero hoy cada vez más de China. La construcción de estas plantas ha creado empleos europeos y cadenas de valor más largas al permitir la inversión de empresas europeas en instalaciones de EV downstream. La apertura continua a la inversión extranjera es importante para las cadenas de suministro de baterías y para otras tecnologías limpias. Si bien Europa tiene capacidades de fabricación de baterías y EV saludables hoy en día, la demanda de ambos aumentará y se necesitará más suministro. Desde 2022, ha habido un cambio en la inversión de manufactura hacia Hungría y España en lugar de Alemania. La transición energética implica una reestructuración de las cadenas de suministro de manufactura, y es inevitable que alguna reubicación industrial sea económicamente eficiente. La política debe abrazar en lugar de luchar contra esto.
Impacto en la industria europea
La industria europea de baterías y EV se está beneficiando de la inversión extranjera, pero también enfrenta desafíos. La competencia con China y otros países en desarrollo es intensa, y la industria europea debe adaptarse para mantener su posición en el mercado. La inversión en investigación y desarrollo es crucial para mejorar la eficiencia y la calidad de las baterías y EV. Además, la industria europea debe abordar la cuestión de la sostenibilidad y la responsabilidad social, ya que la producción de baterías y EV puede tener impactos ambientales y sociales significativos.
Importancia de la inversión extranjera
La inversión extranjera es fundamental para el crecimiento y la competitividad de la industria europea de baterías y EV. Permite a las empresas europeas acceder a tecnologías y conocimientos nuevos, mejorar su eficiencia y reducir costos. Además, la inversión extranjera puede atraer a inversores y empresas de todo el mundo, lo que puede generar empleos y crecimiento económico. Es importante que la política europea apoye y fomente la inversión extranjera en la industria de baterías y EV.
