Europe's Electrification Enters Deep Waters: Where Is the New Engine?

According to a report by Grand View Research, the size of the European battery market in 2023 is approximately $19.21 billion. It is expected to grow at a compound annual growth rate of 20.1% between 2024 and 2030, with the market size potentially reaching $69.2 billion by 2030.

The market potential for electrification of automobiles in Europe is enormous, but the current challenges are also real: for a long time, the battery manufacturing sector in Europe has been dominated by foreign capital. Institutional reports indicate that after the collapse of Northvolt, European battery manufacturers have generally adjusted their strategies to rely more on cooperation with Asian companies, and financial support has become more cautious and pragmatic.

According to the latest report by SNE Research, Asian companies still hold an absolute advantage in the list of the top ten global power battery installations, with a composition of six Chinese companies, three Korean companies, and one Japanese company remaining unchanged.

The data further shows that LG Energy Solution's battery shipments from January to July 2025 were 56.1 GWh, representing a year-on-year growth of only 9%, with a global market share of only 9.5%. CATL's battery shipments from January to July 2025 reached 221.4 GWh, with a year-on-year growth of 34%, capturing a global market share of 37.5%, significantly widening the competitive gap with LG.

As the European electric vehicle market enters a period of deep adjustment, on September 7th, CATL launched the NP3.0 safety technology and Shenxing Pro battery on the eve of the IAA auto show, undoubtedly stirring the European new energy vehicle landscape and injecting new momentum into the already competitive market.

Lithium iron phosphate technology accelerates the adoption of electric vehicles in Europe.

Over the past two years, the European electric vehicle market has undergone a structural transformation. The International Energy Agency (IEA) in its "Global EV Outlook 2025" report indicates that by 2030, the sales share of various electric vehicles in Europe will exceed 55%, with passenger cars and light commercial vehicles contributing the majority.

Under the EU's 2035 target to ban the sale of fuel vehicles, the electric vehicle market has entered a rapid expansion phase. However, the accelerated demand has forced the entire battery supply chain to restructure quickly, and the market landscape is subtly changing. Chinese companies, represented by CATL, are leveraging their technological advantages, understanding local demand, and capturing the European market.

On one hand, the European market is currently still dominated by ternary demand, but it has a high dependency on scarce resources such as nickel and cobalt, leading to significant cost pressures. Additionally, the lack of stability under high temperatures and extreme conditions also poses limitations to the widespread adoption of this technology.

Compared to high-nickel ternary lithium batteries, lithium iron phosphate batteries have lower material and manufacturing costs. According to a research report released by Huaan Securities in 2025, the investment in the ternary cathode segment is approximately 54 million yuan per GWh, while the lithium iron phosphate cathode is only about 32 million yuan, with an investment gap of nearly 68%.

According to Bloomberg New Energy Finance, in addition to investment costs, the average global battery pack price is projected to drop to $115/kWh in 2024, primarily due to the expansion of lithium iron phosphate applications. Currently, lithium iron phosphate batteries have already been applied on a large scale in the Chinese market, providing a solution that balances economic viability and sustainability for the European market.

This transformation is already reflected in the strategic adjustments of companies. Public information shows that the Volkswagen Group is promoting the "Unified Cell" battery strategy, planning to mass-produce lithium iron phosphate batteries at the Sagunto factory in Spain, and to apply them to entry-level models such as the ID.Polo and Skoda Epiq starting in 2026, in order to balance cost and performance. BMW is also introducing lithium iron phosphate solutions in the new generation "Neue Klasse" electric models to reduce dependence on scarce metals like nickel and cobalt.

Traditional automakers such as Volkswagen and BMW are accelerating the launch of new electric vehicle models, making strategic adjustments for battery companies increasingly urgent. On one hand, it's necessary to reassess the supply chain's cost and stability challenges brought about by the choice of technology routes in the battery compartment. On the other hand, there is a need to engage in comprehensive cost comparisons through technological innovation and optimized scenario solutions, making them better suited to the demands and changes of the European market.

It is important to note that lithium iron phosphate technology offers a cost-effective option for the European market, but the real competition may go far beyond this. Amidst the boom, companies like CATL are further providing a "quality-to-cost ratio" choice for the European market by comprehensively optimizing solutions. In other words, batteries must transform from "supplies" to "solutions," which requires battery manufacturers to deeply understand and meet the core needs of users through multi-dimensional innovation and integration.

The multi-dimensional demand in the European market remains urgent.

To offer a product with "quality-price ratio" to the European market, Chinese battery manufacturers have already responded with practical actions. Currently, the battery demand in the European market has surpassed mere supply. Future battery products must meet four-dimensional standards: safety, eco-friendliness, localization, and scenario adaptation. None of these dimensions can be ignored, as they represent the intersection of regulatory requirements, industry transformation, and consumer expectations.

In terms of performance, the harsh winter in Europe and the prevalence of long-distance highways make the range reduction and charging efficiency of electric vehicles in cold environments a major concern for consumers when purchasing. The Norwegian Automobile Association's winter tests indicate that at -20°C, the actual range of most electric vehicles is 20% to 30% lower than the rated value, and fast charging speed also drops significantly. For this reason, the European market has higher requirements for battery technology, which not only needs to ensure stable output under extremely low temperatures but also must support the energy demands of cross-border long-distance driving and high-speed road conditions.

In terms of safety, the requirements of the European market are much higher than before, especially emphasizing system-level protection. The so-called "system-level" not only involves single-point improvements such as flame-retardant materials or structural protection, but also aims to prevent the spread of thermal runaway, ensure continuous high voltage, and avoid open flames and secondary hazards. Only with such safety performance can stable energy redundancy be provided for future autonomous driving and high-speed travel.

Under multiple market challenges, automakers' considerations for suppliers have naturally changed. In addition to factors such as cost, performance, and safety, it is further necessary to assess who can truly implement production capacity, recycling, and compliance in Europe.

With the enactment of the Net-Zero Industry Act, the EU plans to achieve a domestic manufacturing capacity for net-zero technology that accounts for at least 40% of annual deployment needs by 2030. Meanwhile, the Critical Raw Materials Act (CRMA) requires that by 2030, the EU should cover 40% of the processing rate and 25% of the recycling rate of strategic mineral consumption domestically, and reduce dependence on any single third country to no more than 65%.

In terms of green initiatives, the "Battery and Waste Battery Regulations" stipulate that starting from February 2025, all electric vehicle batteries sold in Europe must provide a third-party verified carbon footprint statement, including manufacturing location and batch information, and must be publicly available online. It also requires that from February 2027, all EV and industrial batteries with a capacity greater than 2kWh must carry a digital battery passport, which uses a QR code to display carbon footprint, material sources, lifespan, and traceability information, thereby forming a comprehensive lifecycle monitoring and compliance system.

However, there is still a gap between the ambition of the policy and the reality of the industry. The precedent set by local companies like Northvolt casts doubt on the feasibility of Europe's independent battery path.

Initially enthusiastic about financing production capacity, the capital markets gradually became more rational, with investment enthusiasm cooling down. Investors expressed concerns about short-term profitability prospects and the risk of overcapacity. This friction between policy initiatives and market capital objectively delayed the pace of battery capacity release in Europe.

During this window of opportunity, battery companies with large-scale production capabilities, leading technological advantages, and mature recycling systems have gained a strategic opportunity to enter the market. Suppliers that have proactively established localized production in Europe, implemented digital traceability pilots, and built recycling networks are increasingly being seen by car manufacturers as reliable strategic partners, thus obtaining opportunities for reevaluation and prioritized collaboration.

A typical example is CATL, which has launched production at its Thuringia factory in Germany, is advancing 100GWh capacity construction in Hungary, and is jointly building a lithium iron phosphate battery factory with Stellantis in Spain... These actions allow CATL to take the lead, completing localization in Europe and providing automakers with a cooperative path that both meets policy requirements and reduces compliance risks.

In this game, the test is not who can run faster, but who can provide a sustainable answer that can penetrate policy and market cycles. It can be seen that some leading Chinese companies are proactively offering new solutions to address the concerns of the European market.

Electric vehicles in Europe cannot do without the "heart" from Ningde.

The European Parliamentary Research Service (EPRS) predicts that Europe's battery manufacturing capacity will reach 458 GWh by 2025 and exceed 1000 GWh by 2030. However, supply expansion does not equate to competitiveness; the real determinant of the future landscape is who truly meets the multidimensional needs of the European market. Against this backdrop, CATL's new product has become a key variable in the European market.

Faced with a clear picture of the European market demand, CATL is ready. In the run-up to the IAA Mobility 2025 in Germany this September, CATL made its comprehensive debut in Europe, showcasing its most advanced NP3.0 battery safety technology and the newly customized product—Shenxing Pro battery—to address the challenges of the European market and meet customer needs.

From the perspective of product performance characteristics, CATL precisely addresses the pain points of European users: The NP3.0 technology platform achieves innovative breakthroughs at the chemical system level, structural level, system design, and control strategy level. It integrates eight core technologies, including flame-retardant electrolyte, flame-retardant safety separator, nano-dot coated cathode material, cell safety device, aerogel insulation pad, fire-resistant coating layer, circuit stability control technology, high-voltage active cooling technology, and system control strategy, constructing a "safety iron triangle" for the power battery system.

Contemporary Amperex Technology Co., Limited (CATL) has not only elevated the safety level of power batteries to a new height, but also introduced a new product that has become the optimal solution for electric vehicles in Europe: the Shenxing Pro offers two different approaches — the long-range version can achieve a range of 758 kilometers under WLTP conditions and has a lifespan of 12 years or 1,000,000 kilometers; the ultra-fast charging version supports 12C peak fast charging, allowing it to replenish 410 kilometers of range in 20 minutes even in temperatures as low as minus 20°C, directly alleviating the battery anxiety of Nordic consumers.

It can be said that European batteries cannot do without the "heart" of CATL batteries, which are high-performance batteries that combine high safety, long range, and ultra-fast charging. Once released, they have attracted much attention. Market analysis suggests that for the European market, introducing leading battery suppliers like CATL, with their advanced lithium iron phosphate technology, has accelerated the widespread adoption of electric vehicles in Europe and effectively alleviated the supply chain pressure caused by delayed battery capacity construction.

At the same time, to ensure the smooth progress of Europe's electrification goals, it is necessary to attract high-quality forces to bring technological demonstration effects and healthy competition to the European industrial chain, thereby stimulating more innovation vitality.

For CATL, entering the high-entry-barrier and strictly regulated high-end European market is both a significant opportunity and a comprehensive test of its technology, quality, carbon management, and localized operational capabilities. To meet the stringent standards of the European market, the company must continuously drive technological iterations, strengthen zero-carbon supply chain development, and deepen localized production and research. This process greatly enhances its global competitiveness.

In the past, Chinese companies became a key part of the global supply chain by leveraging their scale and cost advantages. Today, exemplified by companies like CATL, they are starting to gain a voice in high-demand markets through technology and system solutions. As for the future, who will become the driving force of electrification in Europe is self-evident.