The battery market is forecasted to surpass $400 billion globally by 2030. While this growth is driven largely by the surge in electric vehicles, grid storage, and industrial power systems, one regional pattern is impossible to miss: Asia leads by scale, speed, and share.
China’s CATL holds the largest share globally at 36.8% as of 2023. BYD follows closely with a growing market share estimated at 15–17%. LG Energy Solution (South Korea), Panasonic (Japan), SK On (South Korea), and CALB (China) round out the list of dominant players. Their production capacity and vertically integrated supply chains leave little room for others to compete on volume alone.
Europe, meanwhile, is developing its own ecosystem. Projections suggest the region could supply up to 60% of its domestic battery demand by 2030. The European Commission has made leadership in battery production a strategic goal.
Though problems are there, the founders, analysts, and policymakers all over Europe are shifting the narrative. Instead of trying to imitate the Asian model, startups are working on operating models that leverage the region’s key features and policy framework.
Where giants don’t walk
The race for EV batteries is saturated. Margins are tight, specs are standardised, and delivery timelines are aggressive. This is where European startups are choosing to pivot.
Rather than competing for automotive contracts, many are targeting overlooked verticals that require customisation over commoditisation. Sectors like defence, aerospace, medical devices, offshore energy, and industrial robotics demand power systems that deliver in extreme conditions, require minimal maintenance, or must meet non-negotiable safety and compliance standards.
Alterity, based in Spain’s Basque region, chose to focus on mobile robotics and off-grid industrial energy. “It’s not about going after Tesla,” CEO Joseba Villate said in a recent interview. “It’s about knowing who we can serve better than anyone else.”
This approach is echoed across the continent. Instead of producing millions of generic cells, startups are building smaller production lines for specific formats and chemistries. Precision, not volume.
Regulation as a wedge, not a wall
For many years, European regulations were thought to be retaining competitiveness. Yet startups are increasingly viewing these regulations through a different lens.
The EU Battery Regulation 2023/1542 orders carbon footprint declaration, traceability of raw materials, responsible sourcing, and plans for end-of-life recovery. With this, short-term costs hit compliance, while the quality barrier set must be met by the buyers worldwide.
Early adopters of these standards are finding they’re not just eligible for European grants — they’re more attractive to multinationals under pressure to align with ESG goals and regulatory obligations.
French startup Verkor, for instance, raised over €2 billion in 2023 to build its first gigafactory in Dunkirk, aligning its entire production model to EU sustainability and traceability criteria. Investors cited Verkor’s full-cycle planning and its integration with regional policy as key confidence factors.
Circularity is no longer optional.
Data from the European Commission shows that over 70% of a battery’s lifecycle emissions occur during production. This has turned attention toward circularity — not only for environmental reasons but also for cost and risk mitigation.
Companies like Circu Li-ion and Cylib are anchoring their business models in battery material recovery and upcycling. Circu Li-ion focuses on automated battery disassembly. Cylib is developing a major facility in Dormagen, Germany, with operations expected by 2026. According to the company, this could be the largest facility of its kind in Europe, but this forward-looking statement has not yet been independently confirmed.
Startups designing for circularity are growing in popularity. In this regard, modular battery packs, smart disassembly systems, and AI-powered diagnostics predict and extend performance. As reporting on Scope 3 emissions becomes mandated in their respective industries, these B2B buyers increasingly ask for solutions that assist them in tracking and reducing their downstream impact.
Value per cycle, not per unit
Competing on price against manufacturers with 100 GWh+ annual capacity is a dead end. But the economics of batteries shift when measured not by unit cost but by lifecycle value.
A battery that costs 25% more upfront but lasts twice as long, reduces maintenance downtime, and simplifies compliance can be more attractive than a cheaper alternative. This has opened space for business models that emphasise durability, serviceability, and predictive performance.
This strategy aligns closely with use cases in logistics, mining, construction, and remote installations, where uptime is a core cost driver. These buyers prioritise resilience and performance over marginal savings.
Proximity matters
European battery startups are not building in isolation. Regional governments and the EU have structured several funding and R&D programmes to support localisation. PERTE in Spain, Horizon Europe across the bloc, and dozens of industrial clusters offer incentives for startups that embed themselves in domestic ecosystems.
This proximity brings faster access to pilot customers, testing labs, and talent pools. In areas like Grenoble (France), Warwick (UK), and North Rhine-Westphalia (Germany), startup density around clean tech has created momentum beyond subsidies. Founders report that partnerships formed through local accelerators often turn into supply or co-development agreements within months.
Being part of an ecosystem — whether it’s a university-backed lab or an industrial symbiosis park — reduces time to market. It also sends a signal of credibility to funders and partners.
The new logic of partnerships
Europe’s stance on China has grown more cautious, but the startup community takes a pragmatic view. In conversations with founders, many describe Asian players not as adversaries but as potential collaborators.
Some European companies are licensing Chinese cell technologies to build differentiated battery packs locally. Others are importing cells but integrating them into advanced thermal or management systems tailored for European use cases.
In these scenarios, the startup retains control over customer experience, localisation, and regulatory alignment — the parts that often matter most to buyers.
They can help access scale without a capex burden. If it is strategic, the presence of the Asian giants becomes an enabler rather than a threat.
Grants, quotas, and compliance as strategic tools
The Critical Raw Materials Act, proposed in 2023, is meant to ensure secure and sustainable sourcing of materials. Processing 10% of raw materials in the EU, 40% processing, and recycling 15% by the year 2030 would be targeted by it. It also seeks to streamline permitting for strategic projects.
Startups that meet these sourcing standards may qualify for favourable financing, procurement access, or project designation. Companies that do not document traceability or lifecycle impact may find themselves excluded from future channels.
Startups that build compliance into their product architecture — not just their documentation — are becoming preferred vendors across multiple industries. This includes sectors beyond energy, such as aerospace, telecom, and infrastructure.
What’s still missing?
Not all segments are overserved.
New frontiers include sodium-ion batteries for grid storage, solid-state cells for aerospace, and hybrid chemistries tailored for maritime. Some startups are developing modular packs optimised for microgrids, where predictability trumps density.
In each of these, incumbents are either absent or uninterested. That’s the space to explore.
Getting the story right
Startups often spend months perfecting their chemistry but neglect the simplicity of their pitch.
Industrial buyers — especially those outside core battery sectors — want clear, quantifiable value. This includes reduced downtime, faster compliance, or integration support.
Shifting the conversation from “Wh per kg” to “cost per cycle” or “compliance hours saved” opens doors. The buyer isn’t just looking for a battery — they’re looking for lower risk and higher certainty.
Where to go from here
The idea that scale is destiny doesn’t hold in batteries anymore. Not when policy, supply chain risk, and emissions targets are shifting the equation.
European battery startups are already showing that small doesn’t mean marginal. With strategic focus, regulatory alignment, and smart partnerships, they are carving out durable roles in a supply chain that’s being rebuilt in real time.
They don’t need to win the global race.
They need to finish the right one.