A study by consultants Bain & Company warns Europe’s auto industry in no uncertain terms to step up efforts to develop proprietary battery technology.

“In Asia and the US the big battery and car manufacturers are already building plants,” Bain said.  Europe runs the risk of becoming an importer of a component that is seen as crucial to the development of electric vehicles, it added.

“The loss of technical autonomy when it comes to a key component, jeopardizes the long-term competitiveness of the European auto industry,” Bain said in the study, which is called “Li-ion Battery Market for Automotive Applications.”

The market for automotive batteries, still relatively small today, is expected to grow to between 20 billion and 22 billion euros a year by 2020, Bain said. That reflects expectations that the number of electric vehicles will grow rapidly, while, at the same time, battery prices will drop.

Bain notes that lithium-ion batteries use a technology that has been amply tested and has proven itself in mobile phones, laptops and a wide range of tools.

But Gregor Matthies, a Bain partner, said in a statement that lithium-ion batteries will have to grow in performance and production capacity for the auto industry. “The traction battery will decide the success or failure of electro-mobility,” he said. “Thus it will also decide the future of the car industry.”

Bain said there is a global investment competition underway to produce the cheapest batteries in the largest quantities with the best quality.Japan, Korea and China are leading this race, Bain said, citing in particular Sanyo, Sony, Samsung, BYD, LG, Panasonic and Hitachi.

But the consultants also noted that the US is moving rapidly to build up battery production. About 4 billion dollars is being invested in car-battery production facilities in the greater Detroit area. One third of this total, comes from public-sector subsidies, Bain said.

The consultants said the situation in Europe compares unfavorably with competing industrialized regions. Despite annual European car production in excess of 15 million units, only about 1.5 billion euros in investments is planned through 2015. According to a Bain analysis, 5 billion euros would be needed to give Europe a competitive battery industry.