Battery manufacturing in the EU: From hope to crisis to hope again?

Battery manufacturing has long been considered one of the EU’s strategic technological sectors. Its success is essential for achieving competitiveness in the automotive sector – batteries are critical components of electric vehicles – and for Europe to achieve the Fit for 55 objectives.

To strengthen Europe’s position in the global battery market and decrease its reliance on Asian manufacturers, the EU has made conscious efforts to enhance European battery manufacturing capabilities. In October 2017, for example, the European Battery Alliance was launched, with the aim of developing an entire value chain for battery production in Europe. The initiative brings together key stakeholders in the battery value chain to build a strong European industrial base for battery manufacturing and devise an EU industrial strategy. The battery sector has also received strong financial support in the form of EU grants, loans and state aid. Estimates from the European Court of Auditors(opens in new tab)This link opens in a new tab suggest that, between 2014 and 2020, the EU budget provided at least €1.7 billion in grants and loan guarantees to battery research and manufacturing projects. Between 2019 and 2020, a further €6 billion in state aid was approved for two important projects in the area of battery manufacturing.

Despite enjoying such strong support, the European battery sector is facing serious challenges, most notably the bankruptcy of the flagship Swedish battery manufacturer Northvolt. In contrast, Chinese manufacturers are expanding in Europe, according to a report by the International Energy Agency(opens in new tab)This link opens in a new tab, and continue to dominate the global market, accounting for more than 80% of global battery production. In the face of these challenges, it is uncertain whether the EU will achieve its ambitions for the battery sector.

The EU was all set to ramp up domestic production, with ambitions to gain 30% of global market shares (Scott and Posaner, 2020) and cover 90% of European demand from domestic production by 2030. In 2023, nearly 50 gigafactories were planned to be operational by 2030 in Europe (across the EU and in Switzerland, Norway and the United Kingdom) (Transport & Environment, 2023). Initially, these efforts to increase domestic manufacturing capacities seemed to be paying off: in early 2024, eight gigafactories were reported to be in operation, with a further fourteen under construction. Collectively, these facilities look set to offer an annual production capacity of around 190 GWh (IPCEI Batteries, 2024), creating an estimated 50 to 100 direct jobs per gigawatt hour at each site.

Data from the EU Labour Force Survey (EU-LFS) suggest that the increased manufacturing capacity did lead to job creation in the battery manufacturing sector (C.27.2), with the number of workers increasing from 31,176 in 2014 to 66,653 in 2023. The positive impact on employment in the sector is also reflected in data from Eurofound’s European Restructuring Monitor (ERM), which generally align with EU-LFS data (see Figure 1).

Between 2014 and 2023, fifty large job creation announcements were recorded, compared with just four large job loss announcements, three of which occurred in 2023. As a result, there was a net gain of 26,549 jobs during the period. European manufacturers were responsible for the majority of this, contributing 16,527 jobs. In 2024, however, the net employment effect for EU manufacturers turned negative, largely as a result of major job cuts at Northvolt.

Data item

Data visualisation

Open data catalogue

Figure 1

ERM employment changes captured in NACE 27.2 (Battery manufacturing) by company ownership, 2013–2025

Note: The chart shows jobs created (above the horizontal ‘0’ line) and jobs lost (below the line), based on company restructuring announcements.

Source: EU-LFS; ERM. Data valid as at August 2025

Share

Share or save

Looking specifically at Northvolt, ERM data tell the tale of its rise and fall. Between 2015 – when the company was established – and 2023, the ERM recorded only business expansions. During this period, Northvolt announced 6,650 new jobs, thanks largely to the creation of new manufacturing plants in Sweden, Poland and Germany.

The first cracks began to appear in September 2024, when the ERM recorded Northvolt’s announcement of the loss of 1,050 jobs in Sweden. This was just the beginning of the job cuts, however. Since September 2024, the ERM has recorded five large-scale restructuring announcements, resulting in a net loss of 5,290 jobs (5,140 in Sweden and 150 in Poland).

To support the individuals affected by the Northvolt layoffs, in November 2024 the Swedish government announced its intention to apply for up to €14,285,000 in funding from the European Globalisation Adjustment Fund for Dismissed Workers (EGF) (Government of Sweden, 2024). The application was subsequently approved, enabling dismissed Northvolt workers to access additional support through the Swedish Public Employment Service, funded by the EGF (SPES, 2025).

In August 2025, it was revealed that the American start-up Lyten is to acquire all remaining Northvolt assets in Sweden and Germany (Lyten, 2025). As of August 2025, the exact employment effect of this acquisition remains unknown. However, Lyten has announced plans to rehire a ‘significant portion of the previously laid-off workforce’, giving hope to the workers affected.

Data from the ERM indicate that the Northvolt crisis has negatively affected employment beyond the company’s own workforce. By May 2025, the ERM had recorded two cases of large-scale job reductions directly linked to the challenges faced by Northvolt. In December 2024, the installation company and former Northvolt client Instalco announced a reduction of around 100 jobs(opens in new tab)This link opens in a new tab because of problems reaching financial targets – caused, in part, by Northvolt’s own financial troubles. Further, in March 2025, the cleaning agency Sodexo announced the loss of 152 jobs(opens in new tab)This link opens in a new tab, following the closure of Northvolt’s plant in Skellefteå, a major client of the company. Novo Energy, a joint venture between Volvo Cars and Northvolt, announced a reduction of 120 jobs in January 2025(opens in new tab)This link opens in a new tab and of a further 150 jobs in May 2025(opens in new tab)This link opens in a new tab.

The crisis is not just limited to Northvolt clients, either. Europe’s second-largest battery manufacturer, Automotive Cells Company (ACC), backed by Stellantis and Mercedes, is also experiencing issues. In June 2024, the company halted the construction of two gigafactories in Germany and Italy (Piovaccari, 2024). The decision was attributed to the need to switch to lower-cost batteries in the face of slowing demand for electric vehicles. In February 2025, ACC announced plans to reduce its workforce in France by around 100 jobs(opens in new tab)This link opens in a new tab across two locations, in an effort to reduce costs.

Recent ERM data reveal that smaller European companies in the battery sector are also facing job cuts, with Finnish firm Ioncor announcing plans to cut 170 jobs in February 2025(opens in new tab)This link opens in a new tab. Bucking the trend, however, is Ionway, which announced the creation of 350 jobs(opens in new tab)This link opens in a new tab in May 2025, following the opening of its new factory in Poland.

Among South Korean manufacturers – the largest foreign investors in battery production in Europe over the past decade – the trend is also negative (Hwang and Kwon, 2024). Since 2022, they have lost a significant portion of their EU market shares, dropping from around 71% in 2021 to 51% in 2024, largely due to increased competition from Chinese firms.

While European and South Korean companies face challenges, Chinese manufacturers are expanding their global influence, establishing production facilities in Europe, among other places. According to ERM data, this has resulted in a net increase of 5,130 jobs since 2021. China’s expansion in Europe is likely to continue if future gigafactory plans succeed, as 23% of gigafactory capacities announced in Europe will come from Chinese companies (Transport & Environment, 2024).

This expansion by Chinese companies could have several positive impacts on Europe, including on employment through the creation of jobs and the stimulation of local economies. The onshoring of the battery supply chain may also lead to reduced transport emissions and offer the EU and the Member States greater control over the manufacturing process through the ability to set and enforce local standards. However, China’s continued expansion also raises further concerns regarding competition and challenges Europe’s goal of achieving battery independence.

In this context, questions are also being asked regarding the lack of technology and skills transfer between China and the EU. The complex and fast-evolving nature of battery-manufacturing technologies means success in this field is contingent on Europe attaining the relevant skills and expertise from global leaders in the sector. However, recent joint ventures between European and Chinese companies, such as the Stellantis and CATL project to build a €4.1 billion gigafactory in Spain, include limited or no conditions regarding the transfer of intellectual property. To address this situation, experts are calling on the EU to impose clear rules on foreign investments and technology transfers (Transport & Environment, 2025).

Achieving battery independence continues to be a priority for the EU, with Commission President Ursula von der Leyen having emphasised the sector’s strategic importance and the EU’s commitment to supporting it in her 2025 State of the European Union speech. To this end, the EU is taking steps to address concerns in the battery sector. For example, a subsidy scheme was introduced in December 2024 under which

7 intellectual property must be transferred to European businesses in exchange for EU subsidies (Hancock, Bounds and Russell, 2024). Regarding the EU’s battery regulation (2023/1542), meanwhile, the date of application of due diligence obligations has been postponed by two years. This will buy battery producers more time to comply with the new rules, lessening, at least in the short term, the administrative, regulatory and reporting burdens on battery makers. In addition, the EU unveiled an industrial action plan for the European automotive sector(opens in new tab)This link opens in a new tab in March 2025, which includes a ‘Battery Booster’ package with measures to ramp up domestic battery production and strengthen competitiveness in the European automotive industry. This plan builds on other recent measures taken by the EU to address broader concerns about competitiveness, most notably the Competitiveness Compass and the Clean Industrial Deal. While these measures all represent important steps forward, they need to be carefully applied to revive Europe's struggling battery sector.