EU Energy Costs Making EV Battery Factories ‘Unfeasible’

An unexpected byproduct in Europe’s mad rush to dump conventional energy sources and the ensuing spike in costs threatens to make electric vehicle (EV) battery production prohibitively expensive.

That’s the warning from Volkswagen brand CEO Thomas Schaefer, who declared this week that investments in the continent’s EV facilities are far less attractive with current price increases.

Schaefer cautioned that unless energy costs are managed properly, “investments in energy-intensive production or new battery cell factories in Germany and the EU will be practically unviable.”

Policymakers, he declared, must reduce costs “quickly and reliably” for a continued transition to environmentally friendly automotive advances. Otherwise, “the value creation in this area will take place elsewhere.”

German and French economic ministers last week created an outline for cooperation across the EU, but Shaefer believes the plan “falls far short.”

The EU, he said, is not prioritizing “the short-term ramp-up, scaling and industrialization of production. This lack of proper focus, Shaefer reported, is the result of “outdated and bureaucratic state-aid rules.”

The EU is also opposed to President Joe Biden’s so-called Inflation Reduction Act. The package, which amounts to sweeping climate and tax legislation, intended to boost U.S. production of EVs. It also props up domestic production of battery components and materials.

This, the EU believes, violates World Trade Organization regulations and illegally discriminates against non-U.S. facilities.

Volkswagen is currently in the process of planning or building six battery production operations across Europe by 2030.

The transition to EVs in the developed world is running into roadblocks in several nations as policymakers look to the new vehicles as a source of revenue. There has been a noticeable shift away from the economic philosophy of tax credits and incentives for consumers to purchase EVs.

Instead of subsidies, the UK is now considering new taxes to raise revenue from electric vehicles. And Japan’s internal affairs ministry is considering raising taxes on EVs. Why?

To make up for lost government revenue from lowered demand for gasoline — and thus less energy taxes collected.

Soaring energy prices in the EU and turning to electric vehicles as a source of tax revenue threatens to build a roadblock for the worldwide EV push. Instead of continuing the movement towards clean energy, governmental mismanagement is erecting barriers against the EV industry.