Employees work at a solar energy battery workshop of Shine Earth New Energy Co., Ltd. in Nan'an, Quanzhou City, southeast China's Fujian Province, June 17, 2023. In recent years, Quanzhou has strengthened scientific and technological innovation, and guided enterprises to adopt new technologies and materials to drive high-quality and sustainable development. (Xinhua/Liu Yongzhen)

With the EU's strict new battery regulations set to enter into force on Thursday, China's electric vehicle battery producers, which have expanded exports to the bloc in recent years, face rising challenges.

Industry analysts said that Chinese EV battery makers can prepare by 2027 when some requirements specific to the sector take effect. They can try to become more internationalized and competitive with lower-carbon products.

As of January 2027, the EU will require EV batteries entering the market have a "passport" that will display the products' information, including carbon footprints and recycled content. The rules aim to ensure that the market has greener batteries with lower carbon emissions, produced with more recycled materials.

"Our overall aim is to build a stronger EU recycling industry, particularly for lithium, and a competitive industrial sector as a whole, which is crucial in the coming decades for our continent's energy transition and strategic autonomy. The measures could become a benchmark for the entire global battery market," said Achille Variati, a member of the European Parliament.

Yu Qingjiao, secretary general of the Zhongguancun New Battery Technology Innovation Alliance, told the Global Times on Tuesday that the new rules will not only have an impact on Chinese battery makers but also a far-reaching influence on the global battery supply chain, which could reshape the industry. 

The regulations will undoubtedly increase costs and prolong the research and development process for manufacturers in the short term, Zhang Xiang, visiting professor at the Engineering Department of Huanghe Science and Technology University, told the Global Times on Tuesday.

"For Chinese EV battery makers, the specifics required in the digital passport, widely deemed as green trade barriers, will touch their weak points," Zhang noted.

Representatives of China's battery sector have been offering suggestions since the end of 2020 when the EU Commission presented a proposal to regulate electric batteries.

Zeng Yuqun, founder and chairman of CATL, the world's largest batteries maker, said in proposals to China's annual "two sessions" over recent two years that the Chinese EV battery chain should propel transformation toward zero-carbon emissions by launching battery carbon footprint standards, among other moves.

Mainstream battery producers in China have deployed zero-carbon transformation strategies, exploring solutions such as battery carbon footprint, digital battery passport, recycled materials and traceability.

A growing number of Chinese firms including CATL are working with their European peers to develop battery recycling businesses that better meet regulatory requirements, according to Yu.

"Chinese players can translate this challenge into an opportunity in developing greener batteries that meet the standards of developed economies, while accumulating experience in the process of internationalization," Zhang said. "They can be ready by 2027."
China's EV battery output accounts for about 77 percent of the world's total, and Europe is the main market for China's lithium battery exports. Chinese EV battery makers held 34 percent of the EU battery market last year, double the level in 2020, data from South Korean research agency SNE Research showed.