Europe’s automotive sector is not simply another industrial segment.
It represents close to 7% of EU GDP¹, supports around 14 million jobs², and accounts for almost 10% of Europe’s manufactured exports³. For decades, this ecosystem has been one of the defining pillars of Europe’s economic strength.
This is also why the shift toward electrification is so consequential.
As the drivetrain transforms, so does the foundation of Europe’s industrial competitiveness.
WHEN THE ENGINE DISAPPEARS, THE BATTERY TAKES ITS PLACE
In an electric vehicle, the traditional engine is no longer the defining component.
The battery now represents 30–40% of the vehicle’s total value⁴, shaping core performance factors such as driving range, charging time, safety, and overall cost.
In other words: the battery is the car.
Whoever controls battery technology secures a commanding position in the global automotive value chain.
A GLOBAL RACE WITH UNEVEN STARTING POINTS
China recognized this early. Over the past decade, Chinese industry benefitted from over USD 230 billion in subsidies⁵, low-cost capital, large-scale infrastructure, and demand-driven incentive schemes—a long-term bet placed long before profitability was expected.
Some call this protectionism.
There is truth in that.
But history also tells us that Europe’s own industrial champions in automotive, aerospace, and energy systems were not created by market forces alone. They emerged from decades of coordinated policy, visionary investment, and high risk tolerance.
And the difference in mindset is sometimes striking.
More than ten years ago, a Chinese industrialist casually described plans to build a lithium-ion battery factory as a birthday gift for his son. He was not joking. And he needed industrial dehumidification equipment. We supplied it.
EUROPE’S BATTERY SLOWDOWN — A MOMENT OF UNCERTAINTY
Recent developments have put Europe’s battery ambitions under pressure.
Major players have struggled. Northvolt, once heralded as Europe’s flagship project, went bankrupt⁶. Morrow Batteries required emergency state financing⁷. Meanwhile, several European OEMs have paused or abandoned plans for local battery manufacturing and are increasingly importing packs from Asia, with over 30% of projects hampered⁸ and Europe dependent on Asian imports⁹.
These trends are documented in the recent EnergyWatch coverage of the sector’s stagnation, where the European battery industry is described as being “at a virtual standstill.”
As our CEO Martin Brøchner-Mortensen noted in an interview with EnergyWatch, activity today is limited to smaller projects, with fewer large-scale factories moving ahead in Europe.
These market fluctuations have affected the entire value chain, including suppliers like Cotes. Some large projects were delayed; others cancelled entirely. For us, 2023-2024 have been a mix of delivering on existing orders while experiencing fewer new major contracts — a pattern reflected in the article’s observation that the battery business has reached “a simmering level.”
Yet the story does not end there.
WHY COTES HAS CHOSEN TO STAY THE COURSE
At Cotes, we have not stepped away from the sector — we have doubled down on technology and readiness. Learn more about Cotes Ultradry
Battery production remains one of the most humidity-sensitive manufacturing processes in the world¹⁰. To avoid moisture reacting with lithium compounds, many production steps must be performed at extremely low dew points¹¹. Getting this wrong can damage cells, compromise safety, reduce energy density, or shut down entire production lines.
Today, we are one of the very few suppliers capable of delivering –80 °C dew point air at industrial scale¹² — a level many projects still struggle to achieve reliably.
And next-generation battery chemistries are expected to push requirements even further:
• more reactive materials
• drier rooms
• higher energy efficiency demands
• tighter environmental footprints
These trends all point toward more advanced adsorption dehumidification, not less¹³.
THE ENVIRONMENTAL IMPACT IS REAL AND IMMEDIATE
Humidity control is not only a technical requirement; it is also a climate challenge.
A 60 GWh battery factory can save energy equivalent to the annual electricity consumption of ~25,000 households¹⁴ simply by using more efficient air-handling and dehumidification technology. Better humidity control reduces waste, improves yield, and lowers operational emissions — proof that process engineering can have societal impact far beyond the factory walls.
A SECTOR IN TRANSITION, NOT IN DECLINE
The slowdown in Europe is real, and it affects suppliers, investors, and manufacturers alike. But the global battery ecosystem is expanding, not shrinking. Demand for lithium-ion batteries is expected to multiply over the next decade¹⁵, driven by electric vehicles, energy storage, heavy industry electrification, and grid stability needs.
Whether Europe captures a meaningful share of this growth will depend on:
The speed at which projects regain momentum
Investment in next-generation technologies
A willingness to build long-term industrial capacity
Strategic control of key production inputs — including humidity management
Because if Europe controls neither the engine nor the battery, then one difficult question eventually emerges:
Why would customers buy the entire car here?
The answer will shape Europe’s industrial future.
Connect with the author on LinkedIn: www.cotes.com/TRO
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European Commission – Automotive industry
https://single-market-economy.ec.europa.eu/sectors/automotive-industry_en -
ACEA – Facts about the automobile industry
https://www.acea.auto/fact/facts-about-the-automobile-industry -
Bank of Finland – Significance of the car industry in EU countries
https://www.bofbulletin.fi/en/2016/1/significance-of-the-car-industry-in-eu-countries -
ITIF – Battery as up to ~40% of EV value
https://itif.org/publications/2024/07/29/how-innovative-is-china-in-the-electric-vehicle-and-battery-industries -
ITIF – Chinese EV/battery subsidies > USD 230 billion
https://itif.org/publications/2024/07/29/how-innovative-is-china-in-the-electric-vehicle-and-battery-industries -
Reuters – Northvolt bankruptcy
https://www.reuters.com/world/europe/northvolt-bankruptcy-strikes-blow-swedens-northern-boom-town-2025-03-12 -
Morrow Batteries – NOK 1.5 billion state-backed loan
https://www.mynewsdesk.com/morrow-batteries/pressreleases/innovation-norway-grants-nok-1-dot-5-billion-loan-facility-to-morrow-batteries-asa-3361196 -
Interact Analysis – Problems hampering >30% of European battery projects
https://interactanalysis.com/insight/problems-hamper-over-30-of-european-li-ion-battery-projects -
ACEA Fact Sheet – EU battery supply chain & import reliance
https://www.acea.auto/fact/fact-sheet-eu-battery-supply-chain-and-import-reliance -
Destech – Lithium battery dry rooms
https://destech.eu/applications/production/li-ion-batteries-dry-rooms -
Humiscope – Dry room requirements for lithium cells
https://www.humiscope.com.au/lithium-battery-manufacture -
Cotes – UltraDry (ultra-low dew point dry room technology)
https://www.cotes.com/ultradry -
Angstrom Technology – Next-gen dry room requirements
https://angstromtechnology.com/battery-dry-rooms -
Cotes – Dry room energy savings potential
https://www.cotes.com/faq/what-is-the-savings-potential-for-a-battery-dry-room -
Global battery demand multiplying
IEA Global EV Outlook 2024 (PDF):
https://iea.blob.core.windows.net/assets/a9e3544b-0b12-4e15-b407-65f5c8ce1b5f/GlobalEVOutlook2024.pdf
Bain:
https://www.bain.com/about/media-center/press-releases/2024/global-battery-demand-to-quadruple-by-2030-and-oems-must-hone-in-on-their-battery-strategies