Small and medium enterprises (SMEs) play a critical role in Europe’s battery ecosystem. They drive innovation in materials, recycling technologies, component manufacturing, and specialised value-chain services. As the EU Battery Regulation (EUBR) introduces mandatory Digital Battery Passports, SMEs are expected to contribute the same level of transparency and lifecycle data as larger industrial players.

However, the implementation conditions are not equal. For many SMEs, DBP adoption is shaped by two interlinked barriers: high fixed costs and regulatory uncertainty. Without targeted solutions, these pressures risk slowing down the adoption and limiting SME participation in the circular battery economy that the regulation aims to enable.

High Fixed Costs: Where the Burden Falls on SMEs

Implementing a Digital Battery Passport requires more than basic reporting tools. SMEs must capture, structure, store, and exchange verified lifecycle data across multiple stages of battery production and use. This includes battery identifiers, bill of materials, carbon footprint data, due diligence information, performance indicators, and end-of-life parameters defined under Regulation (EU) 2023/1542.

For large manufacturers, these requirements often build on existing enterprise systems. However, SMEs frequently require new investment to stay compliant.

A European Commission impact assessment shows that the one-off and ongoing digitalisation costs for SMEs are substantially larger in absolute and relative terms compared to larger firms in related product digitalisation scenarios.

In one estimate, ongoing digitalisation and data reporting costs for SMEs are hundreds of thousands of euros each with significant variability, while large enterprises face lower relative costs:

• One-off costs for SMEs are estimated at €540,000–€3.6 million vs ±€60,000–€120,000 for large firms.
• Ongoing annual costs for SMEs at €350,000–€2.3 million vs €10,000–€21,600 for large enterprises. (Source)

These costs are not limited to software. SMEs often face additional expenses related to data governance, cybersecurity, interoperability testing, and internal process redesign. Ongoing maintenance, system updates, and audit readiness add further operational overhead.

Verification and Certification Costs

The EUBR mandates third-party verification for carbon footprint declarations and recycled content for most batteries placed on the EU market. While essential for credibility, verification introduces recurring costs that weigh more heavily on SMEs.

Accredited verifiers typically operate on fixed-fee or minimum-fee models. For low-volume producers or specialised recyclers, verification costs can account for a disproportionate share of product margins.

Capacity constraints also matter. As verification demand rises, SMEs risk longer lead times, delayed market entry, and increased pressure on working capital.

Regulatory Uncertainty as an Investment Risk

While the EUBR establishes a clear legal framework, many technical details continue to evolve through delegated acts and implementing measures. The adoption of Delegated Regulation (EU) 2024/1294 on carbon footprint methodology clarified some aspects, but uncertainty remains in areas such as interoperability standards, data granularity thresholds, and reporting templates.

For SMEs, this uncertainty translates into investment risk. Digital systems designed today may require costly modification tomorrow.

This uncertainty can also result in duplicated effort. Firms may develop parallel systems to hedge against regulatory change, increasing costs without adding value.

Operating Across Multiple Markets

SMEs supplying global battery value chains face an additional challenge. While the EU is leading on battery passport regulation, other regions are developing parallel sustainability and traceability frameworks. Diverging requirements increase compliance complexity.

For SMEs with limited compliance teams, adapting to multiple regulatory logics can divert resources away from innovation and core operations. This is particularly acute for recyclers and materials processors operating across European and international markets.

Competitive Imbalance and Innovation Pressure

Larger firms typically maintain dedicated legal, sustainability, and digital transformation teams. They can absorb regulatory change and spread costs across large volumes. SMEs rarely have this luxury.

As a result, early DBP adoption can become a competitive differentiator that favours scale. BASE observations suggest that SMEs struggling to demonstrate compliance may face slower onboarding by OEMs, reduced access to sustainability-linked finance, and weaker positioning in long-term supply contracts.

At the same time, uncertainty and cost pressure can reduce investment in R&D. For SMEs focused on advanced materials or niche applications, this poses a risk to Europe’s innovation capacity.

Policy Support and Collaborative Solutions

Reducing SME burden does not require lowering regulatory goals. It requires better alignment between policy design and implementation realities.

Phased timelines, shared digital infrastructure, standardised data models, and subsidised verification schemes can significantly reduce fixed costs. Industry-wide templates and harmonised guidance also lower the risk of misinterpretation and rework.

From a BASE perspective, the most effective solutions combine regulatory clarity with practical, reusable technical tools.

How the BASE Project Reduces Adoption Barriers

The BASE Project directly addresses these challenges by developing a Digital Battery Passport framework that is interoperable, modular, and scalable. Rather than requiring SMEs to build bespoke systems, BASE provides shared data models, governance principles, and technical architectures aligned with EUBR requirements.

BASE pilots demonstrate that SMEs using interoperable DBP-ready structures can reduce initial system development costs by up to 30% compared with standalone solutions. Standardised schemas and shared validation logic also reduce uncertainty, allowing firms to invest with greater confidence.

By integrating lifecycle data once and reusing it across compliance, sustainability reporting, and operational optimisation, SMEs can transform DBP adoption from a cost centre into a long-term asset.

Looking Ahead: From Barrier to Enabler

High fixed costs and regulatory uncertainty are real challenges for SMEs in the early phases of DBP implementation. Left unaddressed, they risk slowing adoption and concentrating compliance capacity among large players.

However, with the right technical frameworks, policy support, and collaborative infrastructure, these barriers can be reduced significantly. The BASE Project shows that Digital Battery Passports can be implemented in ways that support inclusivity, innovation, and competitiveness.

Ensuring that SMEs can participate fully in the battery passport ecosystem is not only a question of fairness. It is essential for building a resilient, circular, and globally competitive European battery value chain.

The BASE project has received funding from the Horizon Europe Framework Programme (HORIZON) Research and Innovation Actions under grant agreement No. 101157200.

References

European Commission. Regulation (EU) 2023/1542 concerning batteries and waste batteries. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32023R1542

European Commission. Commission Delegated Regulation (EU) 2024/1294 on carbon footprint methodology for batteries.

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32024R1294

Batteries - Environment - European Commission: https://environment.ec.europa.eu/topics/waste-and-recycling/batteries_en

International Energy Agency. Global EV Outlook 2024.

https://www.iea.org/reports/global-ev-outlook-2024

European Investment Bank. Financing the circular economy: https://www.eib.org/en/events/financing-the-circular-economy