Europe’s EV sector braces for global supply chain shocks

Text: Michael Nash, www.automotivemanufacturingsolutions.com.

Hosted in Stockholm, Sweden, the 2025 Swedish Steel Prize brought together leading experts, engineers and analysts from across many different industries and parts of the world. A packed agenda of presentations offered attendees the chance to delve deeper into a variety of key themes, including the future of the European automotive industry.

Erik Nymann, business innovation and market intelligence lead at SSAB, provided a topline insight into the current state of the European automotive industry and explored numerous challenges that are facing both carmakers and suppliers. He began by emphasising the role of the auto industry in the economy, putting the challenges into context.

“I want to highlight just how important the European automotive industry is to technology and also the economy of the entire continent,” he stated. “It comprises almost 7% of GDP in Europe, and employs around 30 million people. Automotive is a rapidly evolving sector, accounting for 30% of total patents in Europe. There is a considerable amount of movement happening right now, with 150 new EVs due to enter the market soon. So, just these facts alone highlight how big this industry is – it is almost too big to fail.

The implications of the shift from internal combustion engine (ICE) vehicles to battery electric vehicles (BEVs) in Europe has been subject of discussion for years, as has the introduction of autonomous driving functionality. Nymann described a list of challenges within these trends, many of which will likely have a direct impact on Europe’s automotive industry over the next few years

Battery production, for example, has been concentrated in China. Data from the International Energy Association (IEA) suggests that over 70% of the world’s EV batteries currently in circulation have been made in China, with CATL and BYD accounting for the lion’s share of production. Furthermore, China is the world’s largest processor of rare-earth elements, several of which are used in batteries for EVs. 

“This is going to be a big challenge for the European automotive sector,” Nymann said. “We also see the decarbonisation of the whole value chain, with increasing emissions reduction targets across the entire sector, not just at a vehicle operation level. We also have this new act of recycling the vehicle coupled with traceability of materials, both of which will be important issues in Europe.”

Recycling in automotive initially started with plastics and fabrics, but there is now a push for companies like SSAB to ensure steel can be recycled at vehicle end-of-life. There are a host of difficult challenges involved, including copper contamination. Nymann suggested that there is enough supply of scrap vehicles to account for 40% of steel used in new vehicle production if all of the steel was successfully recovered. However, the figure currently stands at around 6%. SSAB Zero is created using fossil-free energy and recycled steel, making it a sustainable alternative that will be commercially available in 2026. 

One of the most important trends within the rise of BEVs has been lightweighting, allowing carmakers to achieve longer ranges with their vehicles. Nymann expects an uptick in demand for high strength and ultra-high strength steels as OEMs make more BEVs.

“The BEV market push will continue the need for vehicle lightweighting, and as a result, we expect to see around a 6% increase for high strength steels,” he said. “And we still have an advantage here over aluminium because the raw cost of the material is still much lower.”

At the moment, Chinese OEMs are manufacturing their vehicles in China before exporting them to Europe. However, numerous companies have already announced plans to build plants in Europe. BYD, for example, is constructing plants in Hungary and Turkey, and is considering a third in Germany.

Nymann also listed on-going supply chain issues that can be traced back to the COVID 19 pandemic and Russia’s war in Ukraine, such as the semiconductor shortage. This is still yet to be fully solved, he warned, and could continue having an impact on Europe’s automotive sector.  

All of these challenges require careful consideration from all parties involved in automotive across Europe, from carmakers to government officials. Nymann believes that there should be an exploration into how European companies can react more swiftly to global events, and that safeguarding production and business operations is necessary to ensure Europe’s economy is not as vulnerable to unpredictable issues.