Europe’s indecisiveness on electromobility does not give its automotive industry any competitive advantage. What truly matters is access to raw materials—on which the energy transition equally depends. Control over these resources still lies far away: in China.
The global pioneer in electromobility is, of all countries, one that relies heavily on oil and gas revenues: Norway. But this is not the only peculiarity in automotive policy. In 2023, the EU effectively decided to phase out internal combustion engine vehicles by 2035—only to partially reverse course 19 months later under pressure from the automotive industry, together with Germany, Italy, and several Eastern European member states.
This is striking because maintaining parallel combustion and electric platforms increases costs for manufacturers. That hardly constitutes a competitive advantage over Chinese competitors. Moreover, the political U-turn undermines the predictable regulatory framework that industry and investors require for planning certainty. This is especially true for the automotive industry, which operates on long development cycles of up to 15 years.
But a more fundamental question arises: Is a one-hundred-percent transition to electromobility even possible? Theoretically yes, according to artificial intelligence. In practice, however, the answer currently appears rather negative—especially when considering the supply of necessary raw materials and clean electricity.
Toothless EU Raw Materials Policy
At the beginning of February, the European Court of Auditors published a report examining the EU’s raw materials policy. In 2023, the EU adopted the Critical Raw Materials Act outlining numerous measures intended to reduce its overwhelming dependence on China and a few other countries for materials such as lithium, cobalt, nickel, and rare earth elements. “Toothless and lacking a coherent plan” was the damning verdict of the auditors regarding Europe’s raw materials strategy.
The World Bank forecasts that the green transition will increase raw material demand fivefold by 2050. Based on 2020 levels, the European Commission estimates that demand for lithium will increase eighteenfold by 2030, while demand for cobalt will increase fivefold. Yet three-quarters of the EU’s raw material needs are imported.
Heavy Losses Due to Shortages of Rare Earths
Nevertheless, governments have failed to materially back up their ambitious climate targets. If China chooses to do so, it can simply throttle European industry—as demonstrated by export restrictions on rare earths (permanent magnets), gallium and germanium (used in computer chips) over the past two years.
Thomas Krümmer, a rare earth expert and author of the “Rare Earths Observer,” estimates that the direct and indirect economic losses resulting from China’s rare earth restrictions amount to at least ten percent of global economic output. This has been known since 2010, when China first tightened the screws and triggered the first rare earth crisis—an event that led to the founding of the Institute for Rare Earths and Metals.
Up to 240 Terawatt Hours More Electricity Required
What about the supply of clean electricity? In 2024, 260 million cars were on EU roads. Only three percent—about eight million vehicles—were purely electric. They consume around 16 terawatt hours (TWh) of electricity per year. Total electricity consumption in the EU-27 amounted to 2,732 TWh, of which about 1,000 TWh (40 percent) came from renewable energy sources.
A study by Fraunhofer ISI and the auditing firm PwC forecasts that by 2040, the share of electric vehicles will rise to 30 percent, requiring approximately 240 TWh of additional electricity. To generate this additional power from clean sources, about 120 to 160 gigawatts (GW) of new wind and solar capacity would need to be installed.
However, transport is not the only sector being electrified. Energy-intensive industries, residential heating systems (heat pumps), and data centers are also significantly increasing electricity demand. Overall consumption could rise by 30 to 50 percent—equivalent to an additional 800 to 1,350 TWh. To cover this entirely with renewables, between 470 and 790 GW of new renewable generation capacity would have to be installed over the next 15 years.
The Bottleneck: Grid Expansion
In 2025, according to initial estimates, 85 GW of new wind and solar capacity were added in the EU. If expansion continues at this pace, the EU could realistically achieve its targets.
But solar panels and wind turbines are not the only prerequisites for the green transition. Expanding grid infrastructure, storage capacity, and implementing intelligent control systems are essential to ensure that green electricity reaches where it is required and to guarantee supply security. The expansion of cross-border interconnections also plays a crucial role. The large-scale blackout in Spain—a frontrunner in renewable electricity generation—illustrates the severe consequences of delayed domestic and cross-border grid expansion.
More Raw Material Demand for Power Infrastructure
The investments required for electricity grids in the EU amount to €1.1 trillion by 2040, equivalent to €74 billion per year. Translated into material terms, this means vast quantities of steel and thousands of kilometers of copper cables. The massive expansion of wind turbines and solar panels requires large quantities of critical raw materials such as rare earths, silicon, indium, and selenium, while battery storage depends on lithium, graphite, cobalt, and nickel.
The argument thus comes full circle, returning to the EU’s dependency on raw materials and the auditors’ damning conclusion: “No solid strategy.” It therefore remains unclear how the EU intends to accomplish not only the transport transition but also the broader energy transition without securing the necessary raw materials. Perhaps the wavering course on the combustion engine phase-out reflects a quiet suspicion within political circles that the EU may no longer be able to catch up in the global race for critical minerals.
February 2026 – Arndt Uhlendorff
for the Institute for Rare Earths and Metals AG
The global pioneer in electromobility is, of all countries, one that relies heavily on oil and gas revenues: Norway. But this is not the only peculiarity in automotive policy. In 2023, the EU effectively decided to phase out internal combustion engine vehicles by 2035—only to partially reverse course 19 months later under pressure from the automotive industry, together with Germany, Italy, and several Eastern European member states.
This is striking because maintaining parallel combustion and electric platforms increases costs for manufacturers. That hardly constitutes a competitive advantage over Chinese competitors. Moreover, the political U-turn undermines the predictable regulatory framework that industry and investors require for planning certainty. This is especially true for the automotive industry, which operates on long development cycles of up to 15 years.
But a more fundamental question arises: Is a one-hundred-percent transition to electromobility even possible? Theoretically yes, according to artificial intelligence. In practice, however, the answer currently appears rather negative—especially when considering the supply of necessary raw materials and clean electricity.
Toothless EU Raw Materials Policy
At the beginning of February, the European Court of Auditors published a report examining the EU’s raw materials policy. In 2023, the EU adopted the Critical Raw Materials Act outlining numerous measures intended to reduce its overwhelming dependence on China and a few other countries for materials such as lithium, cobalt, nickel, and rare earth elements. “Toothless and lacking a coherent plan” was the damning verdict of the auditors regarding Europe’s raw materials strategy.
The World Bank forecasts that the green transition will increase raw material demand fivefold by 2050. Based on 2020 levels, the European Commission estimates that demand for lithium will increase eighteenfold by 2030, while demand for cobalt will increase fivefold. Yet three-quarters of the EU’s raw material needs are imported.
Heavy Losses Due to Shortages of Rare Earths
Nevertheless, governments have failed to materially back up their ambitious climate targets. If China chooses to do so, it can simply throttle European industry—as demonstrated by export restrictions on rare earths (permanent magnets), gallium and germanium (used in computer chips) over the past two years.
Thomas Krümmer, a rare earth expert and author of the “Rare Earths Observer,” estimates that the direct and indirect economic losses resulting from China’s rare earth restrictions amount to at least ten percent of global economic output. This has been known since 2010, when China first tightened the screws and triggered the first rare earth crisis—an event that led to the founding of the Institute for Rare Earths and Metals.
Up to 240 Terawatt Hours More Electricity Required
What about the supply of clean electricity? In 2024, 260 million cars were on EU roads. Only three percent—about eight million vehicles—were purely electric. They consume around 16 terawatt hours (TWh) of electricity per year. Total electricity consumption in the EU-27 amounted to 2,732 TWh, of which about 1,000 TWh (40 percent) came from renewable energy sources.
A study by Fraunhofer ISI and the auditing firm PwC forecasts that by 2040, the share of electric vehicles will rise to 30 percent, requiring approximately 240 TWh of additional electricity. To generate this additional power from clean sources, about 120 to 160 gigawatts (GW) of new wind and solar capacity would need to be installed.
However, transport is not the only sector being electrified. Energy-intensive industries, residential heating systems (heat pumps), and data centers are also significantly increasing electricity demand. Overall consumption could rise by 30 to 50 percent—equivalent to an additional 800 to 1,350 TWh. To cover this entirely with renewables, between 470 and 790 GW of new renewable generation capacity would have to be installed over the next 15 years.
The Bottleneck: Grid Expansion
In 2025, according to initial estimates, 85 GW of new wind and solar capacity were added in the EU. If expansion continues at this pace, the EU could realistically achieve its targets.
But solar panels and wind turbines are not the only prerequisites for the green transition. Expanding grid infrastructure, storage capacity, and implementing intelligent control systems are essential to ensure that green electricity reaches where it is required and to guarantee supply security. The expansion of cross-border interconnections also plays a crucial role. The large-scale blackout in Spain—a frontrunner in renewable electricity generation—illustrates the severe consequences of delayed domestic and cross-border grid expansion.
More Raw Material Demand for Power Infrastructure
The investments required for electricity grids in the EU amount to €1.1 trillion by 2040, equivalent to €74 billion per year. Translated into material terms, this means vast quantities of steel and thousands of kilometers of copper cables. The massive expansion of wind turbines and solar panels requires large quantities of critical raw materials such as rare earths, silicon, indium, and selenium, while battery storage depends on lithium, graphite, cobalt, and nickel.
The argument thus comes full circle, returning to the EU’s dependency on raw materials and the auditors’ damning conclusion: “No solid strategy.” It therefore remains unclear how the EU intends to accomplish not only the transport transition but also the broader energy transition without securing the necessary raw materials. Perhaps the wavering course on the combustion engine phase-out reflects a quiet suspicion within political circles that the EU may no longer be able to catch up in the global race for critical minerals.
February 2026 – Arndt Uhlendorff
for the Institute for Rare Earths and Metals AG
