Europe Bets on Fuel Cells to Challenge Battery Dominance

The mobility battery sector is currently dominated by Asian companies, particularly from South Korea, China, and Japan, thanks to their technological prowess and robust supply chains. Recent data shows CATL from China holding a 37.9% market share in 2024, with BYD at 17.2%, highlighting their lead (Global EV battery market share: CATL leads with 37.9%). Meanwhile, Europe faces challenges, as seen with Northvolt’s bankruptcy filing in Sweden on March 12, 2025, attributed to high labor costs and difficulty competing with Asian manufacturers.

Europe’s Battery Industry Challenges

Europe’s efforts to build a competitive battery industry have been met with significant hurdles, as evidenced by the case of Northvolt. Northvolt, once seen as Europe’s flagship battery maker, filed for bankruptcy in Sweden on March 12, 2025, following financial difficulties. This development came after earlier Chapter 11 proceedings in the US, with reports indicating a liquidity crunch despite raising $15 billion in debt, equity, and subsidies. The company’s struggles are attributed to several factors, including higher production costs (about 50% higher than China), supply chain weaknesses, and a lack of specialized labor. Critics also point to Europe’s labor costs, stringent regulations, and perceived lack of industriousness compared to Asian competitors, which have hampered technological advancement and scalability.

Strategic Shift to Fuel Cell Technologies

Fuel cells, particularly Proton Exchange Membrane Fuel Cells (PEMFC), are gaining traction in Europe as a clean energy solution, especially where batteries face limitations. The EU Hydrogen Strategy, adopted in July 2020, sets ambitious targets, including installing 6 GW of renewable hydrogen electrolysers by 2024 and 40 GW by 2030, with production goals of up to 10 million tonnes of renewable hydrogen by 2030 (EU Hydrogen Strategy). This strategy supports the shift towards fuel cells, driven by the need to decarbonize transport and energy systems, particularly in sectors where batteries are less viable.

Europe’s focus on fuel cells is part of its broader climate goals under the Green Deal, targeting carbon neutrality by 2050. The Clean Hydrogen Partnership, with a recent €184.5 million call for proposals on January 15, 2025, funds projects to develop clean hydrogen solutions for transport and energy storage (Clean Hydrogen Partnership). This initiative underscores Europe’s commitment to leveraging fuel cells for heavy-duty vehicles, coastal ships, and unexpectedly, data centers in harsh environments.

Source: https://thebulklab.com