23008_Nearshoring Report

NEW CAR SALES IN THE EU BY FUEL TYPE

100%

80%

60%

40%

And additionally, from a geopolitical perspective, EU and UK trade rules require that, by 2027, up to 70% of a vehicle’s battery cost must originate in the UK or the EU, or products may face tariffs when being exported. As the test on rules of origin are based on the component costs, localising or regionalising the production of the cathode element of batteries is a priority because it accounts for a large part of a battery’s overall cost. From a supply chain resilience perspective, reducing reliance for sourcing key high value-add components outside country/ regional/areas of cooperation may also result in reduced supply disruption through shocks such as the unilateral imposition of limits to export volumes. Additionally, bringing EV battery production closer to where they are required by primary automotive manufacturers means that Europe preserves and protects its technological sovereignty (that is, the access to technologies) which could otherwise be concentrated in a handful of countries outside Europe (notably in the Far East and the US) and also serves to ensure economic development in key growth areas is rooted in Europe.

To meet that demand, key components – especially EV batteries and electronic components such semiconductors – will need to delivered and the EU and the UK have identified the need to prioritise EV battery production within their borders in order to preserve competitiveness and maintain security of supply . Currently, only half the demand for EV batteries was met by production within Europe with the remaining 50% largely being supplied from Asia. EV batteries are most efficiently produced near to primary EV manufacturing facilities. This is because batteries – which represent as much as 40% of the value of an EV – are heavy, expensive and awkward to transport from farther-away locations. Also primary automotive manufacturers and their original equipment manufacturers (OEM) and suppliers have long recognised that being located in close proximity to one another creates synergies , including improved flexibility for JIT production, greater resilience and reliability of supply chains and development of knowledge and skills-based networks around technologies and processes.

20%

0%

2018

2019

2020

2021

PETROL

DIESEL

BATTERY ELECTRIC

PLUG-IN HYBRID

HYBRID ELECTRIC

ALTERNATIVE FUELS*

SOURCE: ACEA *includes natural gas, LPG and ethanol vehicles

ELECTRIC VEHICLE SALES IN EUROPE

6

5

BATTERY ELECTRIC VEHICLES

4

PLUG-IN HYBRID VEHICLES

3

2

1

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 0

SOURCE: Statista Market Insights

71

72

C U S H M A N & WA K E F I E L D

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