The report warned that the European Union may fail to meet climate goals as those efforts rely heavily on the uptake of electric vehicles run on batteries made up of a cocktail of metals ranging from cobalt to nickel and lithium.
The ECA, the EU's independent external auditor, said nearly one in five new cars registered in the bloc in 2021 had an electrical plug. Demand is set to jump with about 30 million zero-emission vehicles expected to hit European roads by 2030, and the sale of new petrol and diesel cars will be banned by 2035.
However, the EU's strategy has not taken into account the bloc's ability to meet this new battery demand.
"The EU aspires to become a global battery powerhouse to ensure its economic sovereignty but will it succeed? The odds are not looking good," Annemie Turtelboom, who led the ECA audit, told reporters.
"We are facing the risk that either the EU will miss its emissions goals for 2035 or that it will reach this target through imported batteries...which would harm European industry and come at very high prices from third countries."
The EU's supply of raw materials is highly concentrated in a few countries with geo-political risks that could result in shortages. For five key materials, the EU's import reliance was on average 78%, the ECA said.
"The EU must not end up in the same dependent position with batteries as it did with natural gas from Russia," Turtelboom said.
Some two-thirds of the world's cobalt is sourced from the Democratic Republic of Congo, 40% of natural graphite is from China and the EU is entirely dependent on imports of refined lithium. China accounts for 76% of global battery production capacity.
Extraction in Europe will take too long. Portugal, which holds the bloc's largest lithium reserves, does not expect production to start until 2026.
Further, the ECA said the EU lags on cost-competitiveness in part due to high energy prices while the EU Commission's data remains outdated and incomplete, and public funding remains uncoordinated leading to overlaps.
