Cost, Capability and the Limits of European Nearshoring: Battery Cells and Semiconductors as Critical Components in the Automotive Industry

Abstract

The transition to electric vehicles is reconfiguring the European automotive supply chain and deepening structural dependencies on Asian producers of battery cells and semiconductors. While nearshoring is widely framed as a resilience-oriented response, it remains empirically underexplored how location decisions for these critical components are actually made. Drawing on 11 semi-structured interviews with original equipment manufacturers and suppliers, and integrating the nearshoring driver framework, the cost-resilience trade-off and GPN 2.0, this thesis identifies two interacting forces shaping location decisions within the European automotive industry. First, cost and finance act not as one driver among several but as an evaluative filter that determines which other drivers become decisive. The cost-resilience trade-off operates as a cyclical mechanism in which resilience is prioritized mainly during disruptions and for supply-critical components. Second, weak territorial embeddedness in Europe, arising from limited capabilities, capacity and upstream supply density, favors a selective 'quasi-relocation' rather than comprehensive nearshoring, shifting coordination power from European OEMs toward upstream suppliers. The thesis concludes that durable, selectively targeted policy support is a precondition for resilience-oriented relocation, while cautioning that such support is costly, hard to coordinate across a fragmented EU, and may establish public-funding dependence.