The new EU battery regulations will impact Chinese and Asian battery companies

The European Union's (EU) highly anticipated battery regulation came into force today after being officially announced 20 days ago. These new guidelines introduce significant changes that are expected to impact global battery producers, with companies in Chinese mainland and Taiwan at the forefront of these challenges.

New Key Highlights:

Starting from 2027, any power battery shipped to the European market will require a "Battery Passport." This legislative journey spanned three years, witnessing the transformation of Asian battery companies from initial concerns to active participation, and ultimately accepting the impending paradigm shift.

With the implementation of the new battery law, Asian battery manufacturers exporting to Europe will face three main challenges:

Carbon Footprint Declaration: Starting from July 2024, the vast majority of batteries exported to Europe must be accompanied by a carbon footprint declaration and label. This requires companies to carefully collect, calculate, and disclose carbon emission data for the entire lifecycle of the batteries, from raw material extraction to production, and on to recycling and reuse. Currently, many Chinese battery companies are working hard to address this issue, with the main challenges being the lack of comprehensive footprint data and mature LCA calculation tools to accurately measure these footprints.

Recycling and Reuse of Battery Materials: The EU's new directive sets specific quotas for the inclusion of recycled materials in power batteries. However, China currently lacks a robust mechanism to verify the use of recycled raw materials in batteries. The absence of a verification system may pose significant challenges for future exports.

Battery Passport Information Disclosure: Starting from February 18, 2027, most traction batteries entering the European market will require a detailed "Battery Passport," necessitating the disclosure of approximately 90 mandatory data attributes. Specific content will include detailed information on battery and manufacturer information, compliance and certification indicators, carbon footprint, supply chain due diligence, material composition, and performance indicators.

China's position and response:

As a leader in exporting power batteries to Europe, China has proactively initiated the introduction of the "Battery Passport" to align with these new European directives. This strategic move aims to ensure a seamless battery trade relationship between China and the EU. Notably, China holds an overwhelming position in the battery production sector, occupying a staggering 77% of the global market share. Additionally, China's share in the European power battery market has rapidly increased, from 14.9% in 2020 to 34% in 2023.

Broader meaning:

The EU's transition to stricter battery regulations demonstrates its firm commitment to sustainability, responsible procurement, and advocating for a circular economy in the battery industry. This move is expected to set a global precedent, prompting other countries to follow suit.