Electric cars are becoming an increasingly important part of Europe's automotive market, but building them locally comes with a difficult cost question. A new report warns that requiring more battery cells to be produced in Europe could increase vehicle prices, potentially placing an additional burden on buyers.
The issue highlights a challenge for European carmakers: developing a stronger local battery industry while keeping electric vehicles affordable. Local production could support manufacturing capabilities and strengthen supply chains, but the higher costs involved may eventually reach consumers.
<h3>Why European Batteries Could Cost More</h3>
Battery production is one of the most important parts of electric vehicle manufacturing. According to a September 22 policy brief from Brussels-based think tank Bruegel, requiring battery cells to be made in the European Union could increase their cost from €50 to €85 per kilowatt-hour.
For an electric vehicle equipped with a 60-kWh battery, the difference would amount to approximately €2,100. This calculation illustrates how a change in battery sourcing could affect the final price of an electric car. The report also estimates that a proposed requirement for lower-carbon steel could add another €200 to vehicle costs. On the other hand, simplifying vehicle approval procedures could save manufacturers around €61 per car.
The figures show that different manufacturing requirements can have different financial effects. While some changes may increase production expenses, others could reduce administrative costs.
<h3>Who Would Pay the Additional Cost?</h3>
Higher production expenses do not automatically translate into higher showroom prices. The final effect would depend on how the requirements are implemented, whether government support is available, and how much of the additional expense manufacturers decide to pass on to customers.
However, buyers looking for affordable electric vehicles could be particularly affected. A price increase of €2,100 may represent a significant difference for someone comparing vehicles within a limited budget. Manufacturers could absorb part of the increase, but doing so might put additional pressure on their profit margins. Alternatively, they could adjust vehicle prices to protect their financial performance.
<h3>Europe's Automotive Industry Faces Pressure</h3>
The discussion comes at a challenging time for European car manufacturing. According to the figures cited in the report, vehicle production in the region has fallen by 19% since 2019. Buyers also purchased 2.2 million fewer new cars in 2025 than in 2019. The wider automotive sector employs approximately 14 million people, making its performance important to a large network of manufacturers, suppliers and workers.
At the same time, the report highlights continued exports and around €3 billion in quarterly investment in battery and electric vehicle factories. This indicates that companies are still committing substantial resources to the development of electric vehicle production. However, building a competitive battery industry requires more than constructing factories. Manufacturers also need reliable suppliers, production equipment, technical knowledge and the ability to produce cells at competitive prices.
<h3>The Difficulty of Building Battery Factories</h3>
Establishing battery production in Europe has proved challenging. The report points to several setbacks, including Northvolt's failure, Porsche's decision to step back from battery manufacturing at Cellforce, and postponed projects involving Automotive Cells Company, or ACC.
Such developments illustrate the difficulty of competing with established battery manufacturing networks elsewhere. Even when battery cells are produced in Europe, factories may still depend on equipment and technical expertise from Asian suppliers. This means local production does not necessarily create a completely independent supply chain.
<h3>Keeping Electric Cars Competitive</h3>
The central challenge is making locally produced batteries affordable enough to support competitive electric vehicle prices. A stronger regional supply chain could benefit manufacturers over time, but the initial investment and production costs remain important considerations.
The report also highlights the importance of giving European carmakers enough time to develop more affordable electric vehicles. Improving production efficiency, strengthening technical capabilities and building dependable supplier relationships could help reduce costs in the longer term.
For consumers, affordability remains an important part of the decision to switch to an electric vehicle. A wider selection of reasonably priced models could make the technology accessible to more households.
Building a stronger European battery industry could support the region's automotive manufacturing capabilities, but it may also increase the cost of electric vehicles in the short term. The estimated €2,100 difference for a 60-kWh battery shows why production requirements deserve careful consideration.
The final impact will depend on manufacturing costs, investment, available support and how companies manage additional expenses. Ultimately, the challenge is not simply producing more batteries locally. It is developing a competitive supply chain while keeping electric cars within reach of ordinary buyers.
