China threatens to flood the global market with excessively cheap EV batteries. Couldn’t the EU Commission have seen this coming much earlier? Batteries are a key technology – just like solar energy. A few years ago, Europe learned the hard way when Chinese industrial policy destroyed German solar manufacturers.
Did anyone believe that Beijing would change its strategy of state subsidies as long as it was capable of creating market leadership and a development advantage? However, being cynical does not help. Nico Beckert reports that ever-cheaper Chinese EV batteries, in particular, will put European competitors under severe pressure after the US drastically increased its tariffs on them. The EU industry’s fight for survival has already begun before it has even grown out of its infancy.
The battle against Chinese dominance is not lost. Compared to the tragedy surrounding the European solar industry, politicians seem to have recognized the destructive power of Chinese overcapacity as a major problem. Hopefully, they are also determined to defend their players with all their might when unfair competition could mean their exodus.
Taiwan is very familiar with seemingly superior Chinese power. The island state has learned how to stand up to it without panicking. Taiwan has managed to secure growing international support for its continued existence as a de facto, independently governed, democratic state at the corner of the People’s Republic.
This was last evident on Monday at the inauguration of President William Lai. Guests from 29 nations were in attendance, including Germany. The group of MPs was aware of the symbolic significance of their visit, as our Taiwan correspondent David Demes reports from Taipei.
The US tariff increase on Chinese electric car batteries will likely shift Chinese exports to Europe. Last week, President Biden announced additional tariffs on Chinese electric car batteries, battery parts, electric vehicles and solar panels to counteract the flood of cheap Chinese overcapacities.
Tariffs on electric car batteries have tripled to 25 percent. In 2026, tariffs on lithium-ion batteries used in other applications, such as energy storage systems, will also be increased. “If Europe does not follow suit with similar tariffs, Chinese batteries will become even cheaper for Europe because the overcapacities have to go somewhere,” says Dirk Uwe Sauer, a professor at RWTH Aachen, to Table.Briefings.
For European manufacturers, this means even more competition. “For the efforts of ACC, Northvolt and VW/PowerCo to produce their own batteries in Europe, this will be a particular burden,” says Sauer. The start-up of new factories will coincide with a period of absolute price competition, making it especially difficult for newcomers.
The battery market already has massive overcapacity. China alone has production capacities sufficient to meet global demand. The country dominates all steps of the supply chain. Experts warn that overcapacity could continue to rise as companies in Europe, the USA, and China continue to invest billions.
By the end of 2025, there could be 7.9 terawatt-hours of global battery production capacity, according to BloombergNEF (BNEF) analysts. However, demand will only be 1.6 terawatt-hours. Even if many of these new factories do not move beyond the planning stage, “the market is heading for an even greater oversupply,” write BNEF experts.
Other experts also believe that the new US tariffs “could drive Chinese batteries to Europe,” as battery expert Andy Leyland of consultancy Benchmark Minerals wrote on Twitter. Earlier this year, Leyland was more optimistic about Western battery manufacturers. “The order books of [Western] companies like Northvolt, LG Chem, and Panasonic are well filled for years,” he wrote.
According to him, China is “in a problematic situation”. The country must export its overcapacities in “Chinese electric cars, electronics and batteries for energy storage,” says Leyland. The market for energy storage systems will experience a significant additional supply of batteries to complement solar and wind storage. “This is a nice boost for the energy transition,” Leyland believes.
Batteries are considered one of the most important future technologies. They are seen as the “new oil” and a “master key” to accelerating the transformation of the energy and transportation systems. Countries leading in the battery sector could achieve “great industrial gains” in the future, according to a recent report by the International Energy Agency (IEA). Currently, China is still the leader in the battery industry. Europe, though still very dependent on China, is catching up thanks to government support and large investments.
Batteries are seen as a key technology for several reasons:
Currently, China dominates large parts of the battery supply chain:
The USA and Europe, however, are catching up and have established numerous factories in recent years. Many more are in the planning stage. According to the IEA, the USA and Europe could meet their battery demand with domestic production by 2030. According to the NGO Transport and Environment (T&E), this could be possible by 2026.
For critical components like cathodes and anodes, however, China’s dominance will likely continue, according to the IEA. T&E also criticizes that there are only two cathode factories in Europe, despite the continent’s potential to meet more than half of the demand through domestic production.
China’s market dominance is due to a long-term industrial policy and subsidies for battery manufacturers. Manufacturers in China are among the technological leaders and can produce large quantities at low prices due to lower energy and labor costs compared to Europe.
The success of European manufacturers in the market will also depend on politics. Europe has significant competitive disadvantages. In Europe, “both the capital expenditures (CAPEX) and operating costs (OPEX) for building and operating battery cell, component, and material factories” are particularly high, writes Transport and Environment. If Europe offered the same government support as the USA under the Inflation Reduction Act (IRA), the annual operating costs for battery factories alone would amount to 2.6 billion euros, the organization calculates.
However, there are other ways to support the industry: “Environmental, social, and governance standards will be crucial in determining market winners and losers,” writes the IEA. T&E calls for a secure investment environment and adherence to phasing out internal combustion engines. Additionally, investment aids at the EU level and “stronger ‘Made in EU‘ requirements for public procurement, subsidies, and EU grants and loans for EV and battery manufacturers” are needed.
A group of German parliamentarians also attended the inauguration of the new Taiwanese President William Lai Ching-te. The group consists of Klaus-Peter Willsch (CDU), Frank Schaeffler (FDP), Ingeborg Graessle (CDU) and Katrin Budde (SPD), Chairwoman of the Culture Committee of the German-Taiwan Parliamentary Friendship Group. She will be in the island republic until Thursday.
At a press conference at the German Institute, the German diplomatic mission in Taiwan, MPs Willsch, Graeßle and Schaeffler answered questions from German-speaking journalists. When asked about the reason for their trip, delegation head Klaus-Peter Willsch said that he wanted to encourage the government in Berlin not to be forced into a corset by “Beijing’s interpretation of the one-China policy.” Willsch also wanted to make it clear to the Taiwanese, as a relatively small country with a nonetheless high profile, “that we stand by their side and will not leave them alone in their struggle for existence.”
Frédéric Krumbein, Heinrich Heine Visiting Professor at Tel Aviv University, researches relations between Taiwan and the EU. He considers the MPs’ trip an important sign of solidarity with Taiwan. “This is Germany signaling support for Asia’s most progressive democracy, which is under increasing pressure from China,” the political scientist said. It would also reaffirm that peace and stability in the Taiwan Strait are of key interest to Germany and the EU and that any change to the status quo should only be made with the consent of the Taiwanese people.
In recent years, Taiwan has managed to circumvent its international isolation by using parliamentary diplomacy and facilitating exchanges with partners below the government level. Visits by German MPs also fall into this category. CDU MP Ingeborg Graessle emphasized the importance of coming to Taiwan to support the people’s right to self-determination. “I think it’s about time that our Sunday speeches in Europe and Germany were followed by action,” Graessle said. Awareness of Taiwan has increased enormously among colleagues in the Bundestag in recent years, she added.
The visit of the MPs was overshadowed by reports that Vice-President-designate Hsiao Bi-khim was denied entry to Germany during her European tour in March. The newsletter “Watching China in Europe” reported this earlier this month. Hsiao was not yet in office at the time and was traveling on private business. She has visited Belgium, the Czech Republic, Lithuania, and Poland. Germany is particularly strict regarding the entry of representatives of Taiwanese constitutional bodies. It bars seven Taiwanese representatives from entering the country. “We were very surprised that people who are not yet in office are already banned from traveling,” commented delegation head Klaus-Peter Willsch.
FDP politician Frank Schaeffler expressed concern that such treatment of the designated Vice President could harm the interests of German companies in Taiwan. “Of course, that doesn’t help to cheer up the business mood,” he said.
Klaus-Peter Willsch announced he would raise the matter with the Federal Foreign Office. “We will make it clear that we will not accept this shift to extend the circle of those excluded from entry while other European countries take a more relaxed view,” Willsch explained. He said he had personally apologized to Vice President Hsiao for how she had been treated.
Willsch concluded by saying he had invited former President Tsai Ing-wen to Germany. In Taiwan, state officials, including presidents, are not allowed to leave the country for at least three years after leaving office. Once this period is over, it could be a test of whether Berlin’s anticipatory obedience to Beijing also applies in this case, said Willsch.
Sinolytics is a research-based business consultancy entirely focused on China. It advises European companies on their strategic orientation and specific business activities in the People’s Republic.
Wang Xiaoshuai has become a familiar face at the Berlinale film festival. The Chinese director has won three Silver Bears over the years. His latest film, “Above the Dust,” premiered at the Berlinale in February this year. The film tells of the upheavals in the lives of China’s rural population.
Told from the perspective of a boy who makes contact with the spirit of his grandfather, the story goes back to the time of the socialist land reforms of the Mao era. The boy also learns about the devastating famines that Chinese farmers suffered in the late 1950s and early 1960s as a result of the failed industrialization campaign, more commonly known as the Great Leap Forward.
Wang is considered one of the most important representatives of the so-called sixth generation of Chinese cinema. Born in 1966, Wang initially studied at the Beijing Film Academy, like many other well-known Chinese directors. At the beginning of his career in the early 1990s, fifth-generation filmmakers such as Zhang Yimou were already enjoying considerable international success, often with epic dramas about the imperial era and China’s recent history.
In contrast, Wang initially focused on contemporary society, in particular, the social effects of China’s market economy reforms and urbanization. His perhaps best-known work is “Beijing by Bicycle,” which tells the story of the life of a young migrant worker in Beijing and won him the Silver Bear at the 2001 Berlinale. In recent years, he has turned his attention to historical themes, such as the film “Red Amnesia” about society’s silence on the Cultural Revolution.
Towards the end of the Mao era, millions of people, including intellectuals and artists, were persecuted in the wake of ideological purge campaigns. By connecting the present and the past, which “Red Amnesia” and many of Wang’s other films have in common, he also attempts to prevent the collective forgetting of the darkest chapters in the history of the People’s Republic.
Wang’s new film “Above the Dust” had not yet been approved by the Chinese censorship authorities before the Berlinale. Films produced in the People’s Republic cannot be shown in China or overseas until the censorship process has been completed. Wang Xiaoshuai decided to show the film at the Berlinale anyway. This is not the first time that Wang Xiaoshuai has come into conflict with the censorship authorities. He produced his first film, “The Days,” in 1993 without their permission and was banned from working for several years as a result.
The creative leeway for filmmakers in China is constantly narrowing. The most artistically acclaimed films of recent decades have rarely been box office hits, while in more recent years, patriotically motivated productions, the so-called hóngpiàn (“红片 – red films”), have dominated the market.
Wang Xiaoshuai himself moved from China to Thailand during the Covid-19 pandemic. He remains in touch with the Chinese film world, but has now come to terms with the fact that his work constantly faces opposition. When an audience member at the Berlinale asked him whether he feared any consequences from the Chinese authorities, his answer received a lot of applause: “It’s like love. If one side tries to love with all its might, but the other side doesn’t return the love, love is of no use. You can’t be loved by the whole world.” Leonardo Pape
Art exhibition at the Chinese cultural center in Suva, the capital of the Fiji Islands: oil paintings in the style of Romanticism depict natural scenes in Xinjiang, home to the country’s Uyghur minority. Such exhibitions are part of a large-scale framing concept of Chinese propaganda. It is intended to evoke positive connotations of Xinjiang instead of reminding people of the systematic human rights violations committed by the Chinese government in the region.
China threatens to flood the global market with excessively cheap EV batteries. Couldn’t the EU Commission have seen this coming much earlier? Batteries are a key technology – just like solar energy. A few years ago, Europe learned the hard way when Chinese industrial policy destroyed German solar manufacturers.
Did anyone believe that Beijing would change its strategy of state subsidies as long as it was capable of creating market leadership and a development advantage? However, being cynical does not help. Nico Beckert reports that ever-cheaper Chinese EV batteries, in particular, will put European competitors under severe pressure after the US drastically increased its tariffs on them. The EU industry’s fight for survival has already begun before it has even grown out of its infancy.
The battle against Chinese dominance is not lost. Compared to the tragedy surrounding the European solar industry, politicians seem to have recognized the destructive power of Chinese overcapacity as a major problem. Hopefully, they are also determined to defend their players with all their might when unfair competition could mean their exodus.
Taiwan is very familiar with seemingly superior Chinese power. The island state has learned how to stand up to it without panicking. Taiwan has managed to secure growing international support for its continued existence as a de facto, independently governed, democratic state at the corner of the People’s Republic.
This was last evident on Monday at the inauguration of President William Lai. Guests from 29 nations were in attendance, including Germany. The group of MPs was aware of the symbolic significance of their visit, as our Taiwan correspondent David Demes reports from Taipei.
The US tariff increase on Chinese electric car batteries will likely shift Chinese exports to Europe. Last week, President Biden announced additional tariffs on Chinese electric car batteries, battery parts, electric vehicles and solar panels to counteract the flood of cheap Chinese overcapacities.
Tariffs on electric car batteries have tripled to 25 percent. In 2026, tariffs on lithium-ion batteries used in other applications, such as energy storage systems, will also be increased. “If Europe does not follow suit with similar tariffs, Chinese batteries will become even cheaper for Europe because the overcapacities have to go somewhere,” says Dirk Uwe Sauer, a professor at RWTH Aachen, to Table.Briefings.
For European manufacturers, this means even more competition. “For the efforts of ACC, Northvolt and VW/PowerCo to produce their own batteries in Europe, this will be a particular burden,” says Sauer. The start-up of new factories will coincide with a period of absolute price competition, making it especially difficult for newcomers.
The battery market already has massive overcapacity. China alone has production capacities sufficient to meet global demand. The country dominates all steps of the supply chain. Experts warn that overcapacity could continue to rise as companies in Europe, the USA, and China continue to invest billions.
By the end of 2025, there could be 7.9 terawatt-hours of global battery production capacity, according to BloombergNEF (BNEF) analysts. However, demand will only be 1.6 terawatt-hours. Even if many of these new factories do not move beyond the planning stage, “the market is heading for an even greater oversupply,” write BNEF experts.
Other experts also believe that the new US tariffs “could drive Chinese batteries to Europe,” as battery expert Andy Leyland of consultancy Benchmark Minerals wrote on Twitter. Earlier this year, Leyland was more optimistic about Western battery manufacturers. “The order books of [Western] companies like Northvolt, LG Chem, and Panasonic are well filled for years,” he wrote.
According to him, China is “in a problematic situation”. The country must export its overcapacities in “Chinese electric cars, electronics and batteries for energy storage,” says Leyland. The market for energy storage systems will experience a significant additional supply of batteries to complement solar and wind storage. “This is a nice boost for the energy transition,” Leyland believes.
Batteries are considered one of the most important future technologies. They are seen as the “new oil” and a “master key” to accelerating the transformation of the energy and transportation systems. Countries leading in the battery sector could achieve “great industrial gains” in the future, according to a recent report by the International Energy Agency (IEA). Currently, China is still the leader in the battery industry. Europe, though still very dependent on China, is catching up thanks to government support and large investments.
Batteries are seen as a key technology for several reasons:
Currently, China dominates large parts of the battery supply chain:
The USA and Europe, however, are catching up and have established numerous factories in recent years. Many more are in the planning stage. According to the IEA, the USA and Europe could meet their battery demand with domestic production by 2030. According to the NGO Transport and Environment (T&E), this could be possible by 2026.
For critical components like cathodes and anodes, however, China’s dominance will likely continue, according to the IEA. T&E also criticizes that there are only two cathode factories in Europe, despite the continent’s potential to meet more than half of the demand through domestic production.
China’s market dominance is due to a long-term industrial policy and subsidies for battery manufacturers. Manufacturers in China are among the technological leaders and can produce large quantities at low prices due to lower energy and labor costs compared to Europe.
The success of European manufacturers in the market will also depend on politics. Europe has significant competitive disadvantages. In Europe, “both the capital expenditures (CAPEX) and operating costs (OPEX) for building and operating battery cell, component, and material factories” are particularly high, writes Transport and Environment. If Europe offered the same government support as the USA under the Inflation Reduction Act (IRA), the annual operating costs for battery factories alone would amount to 2.6 billion euros, the organization calculates.
However, there are other ways to support the industry: “Environmental, social, and governance standards will be crucial in determining market winners and losers,” writes the IEA. T&E calls for a secure investment environment and adherence to phasing out internal combustion engines. Additionally, investment aids at the EU level and “stronger ‘Made in EU‘ requirements for public procurement, subsidies, and EU grants and loans for EV and battery manufacturers” are needed.
A group of German parliamentarians also attended the inauguration of the new Taiwanese President William Lai Ching-te. The group consists of Klaus-Peter Willsch (CDU), Frank Schaeffler (FDP), Ingeborg Graessle (CDU) and Katrin Budde (SPD), Chairwoman of the Culture Committee of the German-Taiwan Parliamentary Friendship Group. She will be in the island republic until Thursday.
At a press conference at the German Institute, the German diplomatic mission in Taiwan, MPs Willsch, Graeßle and Schaeffler answered questions from German-speaking journalists. When asked about the reason for their trip, delegation head Klaus-Peter Willsch said that he wanted to encourage the government in Berlin not to be forced into a corset by “Beijing’s interpretation of the one-China policy.” Willsch also wanted to make it clear to the Taiwanese, as a relatively small country with a nonetheless high profile, “that we stand by their side and will not leave them alone in their struggle for existence.”
Frédéric Krumbein, Heinrich Heine Visiting Professor at Tel Aviv University, researches relations between Taiwan and the EU. He considers the MPs’ trip an important sign of solidarity with Taiwan. “This is Germany signaling support for Asia’s most progressive democracy, which is under increasing pressure from China,” the political scientist said. It would also reaffirm that peace and stability in the Taiwan Strait are of key interest to Germany and the EU and that any change to the status quo should only be made with the consent of the Taiwanese people.
In recent years, Taiwan has managed to circumvent its international isolation by using parliamentary diplomacy and facilitating exchanges with partners below the government level. Visits by German MPs also fall into this category. CDU MP Ingeborg Graessle emphasized the importance of coming to Taiwan to support the people’s right to self-determination. “I think it’s about time that our Sunday speeches in Europe and Germany were followed by action,” Graessle said. Awareness of Taiwan has increased enormously among colleagues in the Bundestag in recent years, she added.
The visit of the MPs was overshadowed by reports that Vice-President-designate Hsiao Bi-khim was denied entry to Germany during her European tour in March. The newsletter “Watching China in Europe” reported this earlier this month. Hsiao was not yet in office at the time and was traveling on private business. She has visited Belgium, the Czech Republic, Lithuania, and Poland. Germany is particularly strict regarding the entry of representatives of Taiwanese constitutional bodies. It bars seven Taiwanese representatives from entering the country. “We were very surprised that people who are not yet in office are already banned from traveling,” commented delegation head Klaus-Peter Willsch.
FDP politician Frank Schaeffler expressed concern that such treatment of the designated Vice President could harm the interests of German companies in Taiwan. “Of course, that doesn’t help to cheer up the business mood,” he said.
Klaus-Peter Willsch announced he would raise the matter with the Federal Foreign Office. “We will make it clear that we will not accept this shift to extend the circle of those excluded from entry while other European countries take a more relaxed view,” Willsch explained. He said he had personally apologized to Vice President Hsiao for how she had been treated.
Willsch concluded by saying he had invited former President Tsai Ing-wen to Germany. In Taiwan, state officials, including presidents, are not allowed to leave the country for at least three years after leaving office. Once this period is over, it could be a test of whether Berlin’s anticipatory obedience to Beijing also applies in this case, said Willsch.
Sinolytics is a research-based business consultancy entirely focused on China. It advises European companies on their strategic orientation and specific business activities in the People’s Republic.
Wang Xiaoshuai has become a familiar face at the Berlinale film festival. The Chinese director has won three Silver Bears over the years. His latest film, “Above the Dust,” premiered at the Berlinale in February this year. The film tells of the upheavals in the lives of China’s rural population.
Told from the perspective of a boy who makes contact with the spirit of his grandfather, the story goes back to the time of the socialist land reforms of the Mao era. The boy also learns about the devastating famines that Chinese farmers suffered in the late 1950s and early 1960s as a result of the failed industrialization campaign, more commonly known as the Great Leap Forward.
Wang is considered one of the most important representatives of the so-called sixth generation of Chinese cinema. Born in 1966, Wang initially studied at the Beijing Film Academy, like many other well-known Chinese directors. At the beginning of his career in the early 1990s, fifth-generation filmmakers such as Zhang Yimou were already enjoying considerable international success, often with epic dramas about the imperial era and China’s recent history.
In contrast, Wang initially focused on contemporary society, in particular, the social effects of China’s market economy reforms and urbanization. His perhaps best-known work is “Beijing by Bicycle,” which tells the story of the life of a young migrant worker in Beijing and won him the Silver Bear at the 2001 Berlinale. In recent years, he has turned his attention to historical themes, such as the film “Red Amnesia” about society’s silence on the Cultural Revolution.
Towards the end of the Mao era, millions of people, including intellectuals and artists, were persecuted in the wake of ideological purge campaigns. By connecting the present and the past, which “Red Amnesia” and many of Wang’s other films have in common, he also attempts to prevent the collective forgetting of the darkest chapters in the history of the People’s Republic.
Wang’s new film “Above the Dust” had not yet been approved by the Chinese censorship authorities before the Berlinale. Films produced in the People’s Republic cannot be shown in China or overseas until the censorship process has been completed. Wang Xiaoshuai decided to show the film at the Berlinale anyway. This is not the first time that Wang Xiaoshuai has come into conflict with the censorship authorities. He produced his first film, “The Days,” in 1993 without their permission and was banned from working for several years as a result.
The creative leeway for filmmakers in China is constantly narrowing. The most artistically acclaimed films of recent decades have rarely been box office hits, while in more recent years, patriotically motivated productions, the so-called hóngpiàn (“红片 – red films”), have dominated the market.
Wang Xiaoshuai himself moved from China to Thailand during the Covid-19 pandemic. He remains in touch with the Chinese film world, but has now come to terms with the fact that his work constantly faces opposition. When an audience member at the Berlinale asked him whether he feared any consequences from the Chinese authorities, his answer received a lot of applause: “It’s like love. If one side tries to love with all its might, but the other side doesn’t return the love, love is of no use. You can’t be loved by the whole world.” Leonardo Pape
Art exhibition at the Chinese cultural center in Suva, the capital of the Fiji Islands: oil paintings in the style of Romanticism depict natural scenes in Xinjiang, home to the country’s Uyghur minority. Such exhibitions are part of a large-scale framing concept of Chinese propaganda. It is intended to evoke positive connotations of Xinjiang instead of reminding people of the systematic human rights violations committed by the Chinese government in the region.
