The latest shift away from EVs is a clear signal: legacy automakers don’t have the guts to fully embrace the electric future. And they’re dragging down battery manufacturers with them, making demand unpredictable and growth harder to plan for.
It all started with promise. In 2019, when I was pushing for Rosatom to build a battery business, I used the EU’s ambitious EV phase-out targets for 2035-2040 as a key selling point. Those targets are still in place, but the commitment? Not so much.
🔋 The Cracks in the EV Dream
1️⃣ Battery Manufacturing is Stalling
The EU’s battery industry is struggling. We’re nowhere near the 1500 GWh of capacity that was promised by 2033. As of now, there are just 32 gigafactories with about 200 GWh capacity. News of delayed or canceled factories (Northvolt, ACC, Freyr) is piling up, and the future of EU battery manufacturing looks shaky.
2️⃣ Automakers Are Wavering
The bigger issue? Demand from automakers is far from certain. Just a few years ago, they were cheerleaders for the EV revolution. Today, they’re holding governments hostage with factory closures and layoffs. We’re even seeing talks of lifting the ban on ICE vehicles and a push for hydrogen alternatives. This kind of indecisiveness is killing battery makers who are trying to plan for the future.
3️⃣ Profit Margins & The Innovator’s Dilemma
Let’s talk numbers: legacy automakers are working with 10-15% profit margins on traditional ICE cars. Chinese EV manufacturers are operating with razor-thin margins of about 5%. And then there’s Tesla, with its 20% margin—the result of the first-mover advantage, quickly eroding. The result? Automakers are trapped. No board in their right mind would back a shift to EVs with lower margins, especially when they’d be forced to cut or close down their profitable ICE divisions.
💼 What Does This Mean for Battery Makers?
EU automakers’ lack of commitment to EVs is throwing battery demand into chaos. One day they’re pushing BEVs, the next it’s hybrids or hydrogen🤦🏻♂️. It’s impossible for battery makers to plan production and investment when the target keeps moving.
In 2019, the EU was leading the world in fighting climate change with bold EV targets. Today, with Chinese EVs flooding the market, it’s clear who’s winning that race. The hesitation of legacy automakers isn’t just costing them—it’s also stifling the growth of the battery industry that’s crucial for the EV future.
📉 The Bottom Line
EU automakers are too late to the EV party. Their high legacy costs, combined with fierce competition from China, make it nearly impossible for them to compete in the low-margin EV world. Their indecision is killing their own future—and dragging down the battery industry along with it.