The geopolitics of batteries: China drives the battery value chain and Europe struggles for energy sovereignty. Key aspects are analyzed in three memos, highlighting the geopolitical impact, cybersecurity, and export controls on cathode technology. Europe needs a comprehensive strategy to compete in new battery chemistries.
The EU must increase visibility in lithium iron phosphate cathode technology supply chains, as China controls lithium iron phosphate cathode technology and dominates the battery market. McKinsey estimates that by 2030, Europe and North America will have between 5% and 10% of global battery production. The 2025 battery technology export restrictions impact European energy storage sovereignty. China seeks to maintain its dominance in battery value chains to exploit dependencies.
US-Europe cooperation towards China is driven by necessity, not goodwill. Although their interests diverge in security and economy, they seek to align and avoid political disengagement. However, differences in approaches, lack of a unified strategy, and trade tensions complicate cooperation. It is crucial to develop adaptable policies and cooperation methods in response to political changes, with an economic focus on protecting against Chinese overproduction.
Tensions between the US and China over rare earths, with new Chinese export measures and Trump’s tariff threats, cause losses of over $1.5 billion in two days and put the APEC summit at risk. China controls 85-90% of the global rare earth processing capacity, essential for the supply chain, affecting sectors such as defense, semiconductors and electric vehicles, and companies like Boeing, Nvidia and Tesla, accelerating decoupling.
