An analysis said that if the European Union mandates the use of batteries produced within the bloc, production costs could rise by up to 2,100 euros ($3,184,900 won) per electric vehicle. Critics say a policy aimed at protecting Europe’s auto industry could instead increase the burden on consumers and slow the rollout of electric vehicles.

InsideEVs reported on Nov. 7 that Brussels-based think tank Bruegel warned in a recent report that the EU’s auto industry protection policy could shift costs onto consumers and taxpayers.

Bruegel estimated that requiring the use of EU-made battery cells would raise production costs to 85 euros ($128,900 won) per kWh from 50 euros ($75,800 won). Applied to an electric vehicle with a 60 kWh battery, it would add 2,100 euros in extra cost per car.

If requirements to use low-carbon steel are also applied, costs increase by about 200 euros ($303,400 won) more. By contrast, savings from simplifying vehicle type-approval procedures were analysed at just 61 euros ($92,500 won) per vehicle.

The rules have not been finalised, and the actual increase in vehicle prices depends on government subsidies and how much of the cost automakers absorb. The entry-level electric vehicle market, where price competitiveness is important, could be heavily affected.

The policy discussion stems from weakening competitiveness in Europe’s auto industry. EU vehicle production has fallen 19 percent since 2019, and new car sales in 2025 were down by 2.2 million vehicles from 2019.

Efforts to foster the battery industry are also facing difficulties. Examples include the bankruptcy of Sweden’s Northvolt and Porsche’s withdrawal from Cellforce battery production. Korean companies hold 65 percent of battery cell production capacity in Europe, while Chinese companies account for 55 percent of capacity under construction.

Critics also pointed to limits in tariff policy on Chinese electric vehicles. The EU imposed additional tariffs of up to 35.3 percent on battery electric vehicles from China but excluded plug-in hybrids. After that, growth in battery electric vehicle imports slowed, while hybrid imports increased.

Bruegel recommended that the EU consider an agreement with China to temporarily limit export volumes of battery electric vehicles and plug-in hybrids, and use the time gained to strengthen the price competitiveness of European companies.