The EU may not be able to produce batteries for 3 million cars. IAA requirements will outpace factory capacity.
A study by Mobility Global commissioned by ACEA estimates that European battery factories will not meet the demand resulting from the Industrial Accelerator Act. Even if cell production rises to 306 GWh by 2032, around 3 million cars could lose access to incentives for batteries of European origin.
The 19-page analysis covers the next decade. The IAA act itself, presented by the European Commission in March 2026, is still under negotiation by the European Parliament and the EU Council. Therefore, its provisions may change.
Three European components by 2027 or 2028
The proposal introduces requirements in two stages. Six months after the regulations take effect, around 2027-2028 according to the authors, the battery would need to contain three components from the EU. Cells are intended to be one of those components.
After three years, around 2030-2031, the number of required components would increase to five. The list would include cells, the battery management system BMS, and active cathode materials.
Mobility Global analyzed three demand scenarios. In none of them does European supply keep up with demand, despite an expected production increase to 306 GWh. ACEA estimates that if the law comes into effect in 2028, around 3 million cars may fail to meet the requirements of the “Made in the EU” program precisely due to a lack of suitable batteries.
The situation for heavy and medium commercial vehicles is even worse. By 2032, the gap is expected to rise to 23 GWh, with demand being about four times higher than the available supply from Europe.
Europe focuses on NMC, while the market shifts to LFP
The planned European gigafactories are primarily focused on NMC cells. However, car manufacturers are increasingly choosing the cheaper LFP cells, especially in popular models. Moreover, cells produced in Europe remain significantly more expensive than imported ones.
The announced production capacity of these factories does not mean that the manufacturing lines are already in operation. These projects depend on funding, permits, and actual construction. An even larger gap exists earlier in the supply chain, with regard to active cathode and anode materials, namely CAM and AAM. Even under low-demand conditions, the shortage may only be resolved between 2038 and 2040.
ACEA suggests investing in the production of pCAM precursors and graphite purification for anodes. The industry also wants support for operating costs, especially energy, rather than just subsidies for factory construction, as well as faster environmental permits.
The third idea is near-shoring and clarifying rules of origin. It is currently unclear whether a component from a country with a trade agreement with the EU, such as Morocco, would be treated as a European product. Such partnerships could help avoid some of the high energy costs and quickly address material shortages.
IAA could therefore start by selecting vehicles for incentives before providing the industry with raw materials and competitive production capabilities. Should the EU delay localization requirements or allow components from partners like Morocco?
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