Battery makers in the EU are being offered 3 billion euros in subsidies by the European Commission to catch up with China by jump-starting the electric vehicle industry.

The European Commission has today proposed to the Council a specific one-off extension – until 31 December 2026 – of the current rules of origin for electric vehicles and batteries under the EU-UK Trade and Cooperation Agreement (TCA). This proposal does not affect the TCA’s wider rules of origin which will be applicable as of 2027, as planned. The Commission is also setting aside additional funding of up to 3 billion euros to boost the EU’s battery manufacturing industry.

The rules of origin for electric vehicles and batteries under the TCA were designed in 2020 to incentivise investment in the EU’s battery manufacturing capacity. Circumstances not foreseen in 2020 – including Russia’s aggression against Ukraine, COVID-19’s impact on supply chains, and increased competition from new international subsidy support schemes – have led to a situation where the scaling-up of the European battery ecosystem has been slower than initially anticipated, the Commission stated.

At the same time, the Commission reaffirms its political commitment and strategic support to further foster battery production in the EU. To this end, the Commission will provide funding of up to 3 billion euros, for three years, to the most sustainable European battery manufacturers. This will create significant spillover effects for the entire European battery value chain, notably its upstream segment, as well as support the assembly of electric vehicles in Europe.

“We want our European industry to be leaders in the green transition. By providing legal certainty on the applicable rules and unprecedented financial support to European producers of sustainable batteries, we will bolster the competitive edge of our industry, with a strong value chain for batteries and electric vehicles. This is a balanced solution that protects EU’s interests,” said Maroš Šefčovič, Executive Vice-President for the European Green Deal.

Today’s proposal will now be discussed in the Council. The decision by the Council will determine the EU’s position in the Partnership Council, the Trade and Cooperation Agreement’s highest decision-making body.