Battery cells are poised to become the most important component in future vehicles as the industry moves away from internal-combustion engines and toward battery-electric vehicles. With an increased demand for battery packs, battery cell production will be paramount, and the European Union plans to address its competitive disadvantage.

The EU announced a battery cell alliance to build battery cells for future vehicle and technology applications. Maroš Šefčovic, EU Commission vice president in charge of the Energy Union, led the announcement and said Europe must act swiftly to ensure its economies and future jobs. Today, Asia—more specifically Japan and China—dominates the battery-cell production sector. 

"The lack of a domestic, European cell manufacturing base jeopardizes the position of EU industrial customers," he said, according to Euractiv, "because of the security of the supply chain, increased costs due to transportation, time delays, weaker quality control, or limitations on the design."

European Union battery alliance announcement

European Union battery alliance announcement

Executives from the automotive and chemical industries joined engineers to begin work on a future battery-cell production roadmap. The alliance may adopt a battery-cell-production strategy as early as February 2018.

The move is significant for two reasons. Foremost, many European countries plan to ban the sale of new cars powered by fossil fuels in the coming decades. Notably, Norway, the Netherlands, France, and the United Kingdom have all set target dates. Norway and the Netherlands will implement their bans as soon as 2025.

Secondly, as automakers work to meet these new regulations, battery-cell supplies will be crucial. Volkswagen alone said it will need more than 200 gigawatt-hours worth of battery cells to carry out its extensive electric-car plans. In Tesla terms, that's 40 gigafactories worth of battery cells. And Volkswagen won't be the only automaker fighting for a supply of battery cells.