EU’s technological dependencies towards China: the case of EV batteries

In recent years, the European Union (EU) has increasingly relied on China for critical technologies, pivotal for its digital and green transition. As the market of electric vehicles (EV) grows rapidly, demand for critical inputs has also soared, including lithium-ion batteries. China holds a dominant position along the EV battery supply chain, which has resulted in high exports to Europe and growing integration with the EU market. The EU finds itself in a delicate position, faced with the challenge to disentangle from dependencies on Chinese critical technologies, while preserving foreign investments in critical sectors and boosting local manufacturing capacity. Several measures have been introduced at the EU level, but a more all-round approach and longer-term industrial policies will be needed to scale up the EU’s de-risking capacity.