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Position Paper on Local Content Requirements for Europe's Battery Value Chain
Our proposal
Local Content Requirements (LCR) can create the demand Europe needs to develop a competitive battery value chain, including recycling, without restricting market access.
Due to global overcapacity and strong competitive pressure, policies should now stimulate commercial linkages and utilization of European assets.
BASF Battery Materials' proposal combines stepwise quotas with production support based on output to strengthen resilience and competitiveness during the ramp-up phase.
Why Local Content Requirements matter for Europe now
Europe's battery value chain is still developing and is not yet commercially interlinked, which limits steady order and product flows between value chain steps. Global competition is shaped by long established ecosystems and current overcapacity, which increases export pressure into Europe and makes utilisation and competitiveness harder for European assets.
BASF Battery Materials therefore supports Local Content Requirements as a market pull mechanism that can stimulate commercial linkages across the ecosystem.
BASF Battery Materials' approach at a glance
BASF Battery Materials supports Local Content Requirements across all steps of the battery value chain, including recycling, because policy impact is strongest when design is consistent across upstream and downstream stages.
BASF Battery Materials recommends an incentive based approach in which compliance unlocks benefits, while non compliance does not restrict market access.
The BASF Battery Materials concept also anticipates that requirements should tighten over time and differ by value chain step, and that methodology should be developed with industry so it reflects technical and commercial feasibility and remains compatible with a rules based trade framework.
Pillar 1: Stepwise quotas for 'European made'
BASF Battery Materials recommends mandatory quotas for European made materials along the value chain for batteries used in vehicles for propulsion. The quota trajectory should tighten over time and does not need to reach 100 percent, because the objective is to strengthen European industrial capacity while maintaining market openness.
BASF Battery Materials also recommends setting thresholds and timing by value chain step to reflect realistic procurement capabilities as the ecosystem develops.
Recommended quotas
| Item | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | 2035 | 2036 | 2037 | 2038 | 2039 | 2040 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Batteries | 10% | 15% | 20% | 25% | 30% | 35% | 40% | 45% | 50% | Stable 50% | ||||
| CAM | 10% | 15% | 20% | 25% | 30% | 35% | 40% | 45% | 50% | Stable 50% | ||||
| PCAM | 10% | 15% | 20% | 25% | 30% | 35% | 40% | 45% | 50% | Stable 50% | ||||
| Metals | 10% | 15% | 20% | 25% | 30% | 35% | 40% | 45% | 50% | Stable 50% | ||||
Pillar 2: Output based support for 'European production'
BASF Battery Materials proposes output based production support to bridge the ramp up phase and help improve competitiveness until economies of scale are reached. Eligibility is linked to European production, defined as production in Europe with at least 25 percent European ownership, which focuses public support on local industrial value creation and employment outcomes.
This pillar complements quotas by improving the economics of producing finished goods in Europe during early scale up.
Eligibility summary
| Company, ownership | Location | European made (to fulfill Quota) | European production (eligible for subsidy) |
|---|---|---|---|
| <25 % EU | EU | Yes | No |
| ≥25 % EU | EU | Yes | Yes |
| <25 % EU | Non EU | No | No |
| ≥25 % EU | Non EU | Yes | No |
Definitions and verification
Predictable implementation depends on clear definitions and measurable methodology. In the BASF Battery Materials concept, European made includes production in Europe and production outside Europe when the producing company is at least 25 percent European owned, while European production refers to production in Europe with at least 25 percent European ownership for subsidy eligibility.
BASF Battery Materials also recommends that Local Content Requirements methodology should be measurable and traceable and link seamlessly with Battery Passport requirements, and that calculation methodology should be developed with industry to reflect realistic production and procurement conditions.
Recycling and complementary measures
For recycling, BASF Battery Materials recommends defining Local Content Requirements on metal refining outputs, because this is the meaningful point for local content accounting in downstream steps. BASF Battery Materials considers Local Content Requirements for black mass to be counterproductive because they can restrict desired imports and reduce the metals loop in Europe.
BASF Battery Materials also calls for complementary Foreign Direct Investment conditions and incentives so that investment strengthens Europe's strategic autonomy and industrial base while maintaining market openness and collaboration.
FAQs
What is BASF Battery Materials' overall position on Local Content Requirements in Europe?
BASF Battery Materials supports Local Content Requirements as an effective market pull mechanism to strengthen Europe's battery value chain while keeping markets open and aligned with rules based trade.
The BASF Battery Materials position applies to the full value chain and explicitly includes recycling, because resilient industrial capacity requires consistent design across upstream and downstream steps.
Should Local Content Requirements restrict market access for non compliant products?
BASF recommends an incentive based approach in which compliance enables access to benefits, while non compliance does not restrict market access.
This design is intended to stimulate European production and commercial linkages without turning Local Content Requirements into a market exclusion tool.
What does BASF Battery Materials mean by 'European made' and 'European production'?
In the BASF Battery Materials concept, 'European made' covers production in Europe and can also cover production outside Europe when the producing company is at least 25 percent European owned.
'European production' is used for subsidy eligibility and refers to production in Europe combined with at least 25 percent European ownership.
Why does BASF Battery Materials propose a two pillar approach?
BASF Battery Materials proposes a two pillar concept to separate quota requirements from subsidies and to balance resilience goals with competitiveness needs.
The first pillar uses stepwise 'European made' quotas that tighten over time without needing to reach 100 percent, while the second pillar complements this with output based production support for eligible European production during ramp up.
How should thresholds and timing be set across the value chain?
BASF Battery Materials recommends that thresholds and timing differ by value chain step and become stricter over time as European capabilities and procurement realities evolve.
This step specific trajectory is meant to reflect technical and commercial feasibility and to support the gradual build up of a functioning European ecosystem.
How does BASF Battery Materials propose to handle recycling within Local Content Requirements?
For recycling, BASF Battery Materials recommends defining Local Content Requirements on the output of the metal refining step, for example nickel sulfate, because the refinery output is the meaningful point for traceable local content accounting.
Local Content Requirements on black mass is considered counterproductive in the BASF Battery Materials position because it can restrict desired imports and reduce the number of metals kept in the loop in Europe.
Does BASF Battery Materials support allowing non European inputs in European CAM products?
BASF Battery Materials recommends a partial allowance of non European inputs in European CAM products to enable the establishment of a full value chain, especially in early phases when local procurement capabilities are still developing.
This pragmatic flexibility is intended to support competitiveness and resilience at the same time, rather than forcing rigid sourcing rules that could block scale up.
How should Local Content Requirements be measured and verified?
BASF Battery Materials recommends an Local Content Requirements methodology that is measurable and traceable and designed to link seamlessly with Battery Passport requirements.
To make verification workable in practice, BASF Battery Materials also recommends developing calculation methodology in collaboration with industry and grounding it in realistic production and procurement conditions.
How does BASF Battery Materials view Foreign Direct Investment in the European battery value chain?
BASF Battery Materials expects that Local Content Requirements may accelerate the expansion of production footprints in Europe, including by non European players, and therefore calls for complementary Foreign Direct Investment rules that maximise benefits for European industry and strategic autonomy.
Clear incentives and conditions can help ensure that additional investment strengthens Europe's industrial base, employment, and resilience goals, without undermining market openness.
How does BASF Battery Materials ensure the approach remains consistent with international trade principles?
BASF Battery Materials recommends designing Local Content Requirements in a way that encourages onshoring and commercial linkages but does not serve to exclude non European players from the market.
The BASF Battery Materials position explicitly points to the importance of staying consistent with a predictable rules based international trade policy framework.
How does the BASF Battery Materials position relate to broader EU battery policy and regulation?
BASF Battery Materials welcomes the EU Battery Regulation as a solid framework and supports measures that incentivize responsible sourcing, low carbon footprint ambition, and resource efficient end of life battery management.
In addition, BASF Battery Materials supports EU regulatory efforts and underlines that policy tools should be designed in close collaboration with industry to be effective and practical.
What should stakeholders do next if they want to discuss implementation details?
BASF Battery Materials welcomes dialogue on practical Local Content Requirements design and implementation choices across the battery value chain, including recycling.
The position also supports a strategic dialogue between policy makers and industry to enable a functioning European battery value chain and to refine definitions, measurement approaches, and complementary measures in a workable way.