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Powering the future: The growth of Europe’s battery supply chain

In October 2025, Marsh, Rystad Energy, and Commodity Trading Club hosted an event in London to discuss how Europe can develop secure, resilient, and sustainable battery supply chains. Learn more about the key takeaways from this discussion.

The demand for battery raw materials is expected to increase significantly over the next decade, driven by the growth of electric vehicles (EVs) and energy storage systems. Europe is entering an exciting phase as it expands its production base for battery materials, including lithium, with the aim of strengthening its global position. However, the region faces persistent vulnerabilities such as heavy reliance on imports, supply chain complexities, rising energy and labour costs, slower-than-expected market developments, and the challenge of securing capital-intensive investments — all of which could undermine the sector's competitiveness.

In October 2025, Marsh, Rystad Energy, and Commodity Trading Club hosted an event in London to discuss how Europe can develop secure, resilient, and sustainable battery supply chains. The key takeaways from this discussion are summarised below.

Financing the battery revolution: Overcoming capital challenges

Securing funding for capital-intensive battery projects remains crucial to scaling the value chain. In Europe, raising capital for land, construction, machinery, technology, and operations can be challenging. Supply chain disruptions and permitting delays further threaten the steady revenue streams that investors seek.

Equity risk is primarily addressed through non-recourse and project finance structures, where project success can depend on strong offtake agreements and the ability to secure favourable pricing for products. One participant from a multinational energy company highlighted the importance of engaging potential buyers (offtake partners) early to align project schedules and expectations.

Government support emerged as a key theme. Panellists highlighted the US Inflation Reduction Act (IRA) as a benchmark for accelerating investment through subsidies and tax credits.

Experience from companies operating in the US and Europe indicates that measures in the US, such as Executive Order 14265, have served to streamline acquisitions and reduce uncertainty, boosting investor confidence. For example, a US$225 million Department of Energy grant accelerated a US lithium project, illustrating the impact of government backing. While the US lithium battery market is growing faster than the EU’s, due in part to such support, the EU market is maturing and leveraging lessons learned abroad to build its capabilities. As one participant noted, it has “been great for us to be able to develop our capabilities in the US and then bring that across into the projects in Europe.”

Indeed, the EU is fast-tracking battery projects through initiatives such as the FASTEST project, which accelerates battery R&D, and regulations like the Net Zero Industry Act and the Critical Raw Materials Act, which prioritise strategic projects and streamline permitting. The EU Commission has identified 47 key projects to expedite the raw material value chain, aiming to reduce historically lengthy permitting timelines.

Innovative financing models, such as venture tech approaches, are gaining traction for critical mineral production in Europe and North America. These models tend to prioritise investors’ vision and commitment over traditional cash flow metrics, helping earlier-stage developers to secure funding.

Mapping the hidden layers of battery supply chains

The global battery supply chain is complex and geographically concentrated, with China holding 80% of battery cell manufacturing capacity. Chinese restrictions on exports of certain technologies and critical minerals, including lithium iron phosphate (LFP) batteries, have limited European producers’ ability to develop LFP chemistry without reliance on China.

To enhance growth, Europe should focus on manufacturing optimisation, access to capital, cost reduction, and technological innovation. Currently, European lithium-ion (li-ion) battery pack prices average 163€/kWh, about 40% higher than China’s 116€/kWh.

Despite strong R&D support and new policies, Europe remains dependent on imports for the supply and extraction of raw materials. Emerging geothermal lithium projects show promise, but short-term gaps mean imports will remain necessary for some time.

Bruno Livi of Marsh emphasised the importance of examining supply chain interdependencies and bottlenecks beyond direct suppliers, “where dependencies can increase up to 150-fold.” He added that many companies lack visibility into these extended networks.

AI-powered platforms like Marsh McLennan’s Sentrisk, together with specialist insights, can enhance supply chain visibility. For example, Sentrisk analysed a battery supply chain by mapping its extensive supplier networks and incorporating geopolitical, natural hazard and concentration risks, enabling rapid, data-driven insights to inform risk management and strategic planning. Strategies to strengthen supply chains include supplier development programs, diversification, and nearshoring or friendshoring.

Sustainability as a strategic imperative

From a financing perspective, one speaker said environmental, social, and governance (ESG) alignment is “a license to finance. It's not a nice-to-have. It's a must-have, a non-negotiable requirement.”

Financing and risk management in the battery supply chain requires integrating environmental and sustainability concerns into risk assessments, supplier due diligence, and embedding sustainability factors into business strategies. As Aaron Bailey of Marsh said, sustainable business practices can attract investment and align with the insurance industry’s growing focus on responsible practices.

Navigating political minefields

The geographical concentration of lithium makes the battery supply chain susceptible to disruptions stemming from political instability, trade disputes, or natural disasters in key producing regions.

Investors and project owners often have to balance value creation with short- and long-term risks. While perceptions of political risk can deter investment, such risks can be managed through country-specific assessments, market intelligence, regulatory support, and insurance solutions.

Companies are adopting several risk mitigation strategies, including:

Assessing the impact of country risks using resources such as Marsh’s World Risk Review, which provides up-to-date country risk insights.
Integrating political risk into risk management decisions at an early stage.
Adopting risk mitigation solutions, such as political risk insurance or trade credit insurance.

These measures help manage country risk, reduce financial exposure, and can assist in unlocking new investment opportunities.

Balancing innovation, risk, and opportunity

Europe’s battery supply chain faces a dynamic interplay of global economic forces, industry trends, political motivations, and business strategies. As the sector evolves, companies can increasingly benefit from a nuanced understanding of their risk exposures and solutions in their operating regions.

As one panellist said, Europe’s battery market is interesting because it has first-of-a-kind projects, many of which are trying to break new ground. One panellist cautioned that the success of Europe’s battery supply chain “depends on keeping the promises that we make.” Insurance coverage has an important role in the growth and strengthening of Europe’s battery supply chain by protecting investments, enabling growth, and promoting compliance with regulatory requirements and consumer expectations.

For more information on mitigating risks in your battery supply chain operations, please contact your local Marsh representative.