This key region is the focus of new electric-vehicle battery production among global auto giants

The auto giant has also signed a deal with French startup Verkor to co-develop and manufacture high-performance batteries, with a view to Renault owning more than 20% of the firm.

In the U.K., Nissan 7201, +2.44% is set to announce a major expansion of battery production in the northern English city of Sunderland, where it already has a major vehicle manufacturing plant, the BBC reported on Monday. The move would create thousands of new jobs, both directly and in the supply chain, could also accompany the launch of a new electric-vehicle model, according to the report.

Also read: Tesla is about to dramatically reverse market-share losses in a key region, according to this analyst

Europe overtook China in 2020 as the world’s largest market for electric-vehicles, amid a pedal-to-the-metal push across the region to increase EV adoption with new fines over emissions targets for manufacturers and increased incentives for buyers. While China has taken back the top spot in 2021, Europe remains a critical market for global automakers looking to sell more electric-vehicles.

Together, Renault and Nissan, which are joined in a manufacturing alliance, accounted for 12.5% of the electric-vehicles registered in 18 key Europe markets by April 2021, according to automotive analyst Matthias Schmidt, the publisher of the European Electric Car Report. Those 18 markets include 14 major European Union states plus the U.K., Norway, Iceland, and Switzerland.

That puts the Renault-Nissan alliance behind only Volkswagen Group VOW, -2.13% and Stellantis STLA, -1.11% — the group formed earlier this year from the merger of Fiat Chrysler and PSA Group—and just ahead of Tesla TSLA, +2.40%, which had 11.9% of the European market in the first fourth months of the year.

Plus: Buy these 3 battery stocks to play the electric-vehicle party, but stay away from this company, says UBS

More broadly, moves to step up EV battery production come amid a looming supply pinch. In a report published in March, analysts at Swiss bank UBS UBS, -1.28% predicted that the required battery-cell supply to meet the increased demand will result in “regional tightness this year and global shortages by 2025.”

In order for electric-vehicle market penetration to reach 20% in 2025 and 50% in 2030, as projected, battery-cell supplies need to increase 70% more than previously forecast over the next decade, according to UBS. A supply shortage is imminent, the analysts said. 

In this fast moving space, the UBS analysts said that incumbent battery-cell makers are at a significant cost advantage, and predicted that there will be a consolidated structure with two-thirds of the market being controlled by three top players: Contemporary Amperex Technology 300750, +3.71%, LG Chem 051910, -0.95%, and Panasonic 6752, -0.46%.