Europe's battery cost gap starts at the ramp-up

The bill no one writes down

This article is brought to you in partnership with Hymson

In May 2026, Morrow Batteries filed for bankruptcy. It was Norway’s first lithium iron phosphate (LFP) cell maker. Northvolt, the larger Swedish cell maker, had already collapsed.

Both went down while global battery demand kept rising.

Together, largely through Northvolt, they attracted billions in financing and signed customers. The most expensive part came after the equipment arrived, when the lines had to start making cells.

Energy and labor explain part of Europe’s battery cost gap.

They miss the part that did the most damage. The bigger bill often comes before a factory can ship cells that a customer will accept. It builds after the equipment is installed, while the line still has to move from acceptance tests to qualified output.

In many European projects, the equipment suppliers and the cell maker never share enough responsibility for the ramp-up production.

Europe also keeps score on the wrong number. It measures factories by announced capacity, when the better number is qualified output: cells that pass validation and can be sold.

The gap between those two numbers is where much of the European money has vanished.

The number Europe argues about, and the one it ignores

Start with the number everyone quotes.

BloombergNEF put 2025 pack prices at $84 per kWh in China and $131 in Europe, a 56% spread. The blame lands on energy bills and wages. Equipment adds to it: Porsche Consulting and VDMA estimate European machinery can cost up to 50% more once CE marking, safety rules, and documentation are included.

The headline gap is not a fair comparison.

Part of it is chemistry.

China produces mostly LFP, while Europe still relies on nickel-rich chemistries such as nickel manganese cobalt (NMC) and nickel cobalt aluminum (NCA), which use higher-value metals. The regional spread measures what the cells are made of as much as how well they are made.

Roland Berger adds a second distortion. Chinese overcapacity near 100% has pushed LFP toward marginal cost, as low as €30 per kWh, so oversupply widens the headline gap on its own.

Strip both out, and a real gap remains.

Roland Berger’s late-2025 model puts Europe’s cell-cost disadvantage at €9-€11 per kWh, about 15-20%. Higher capital and energy costs explain part of it. Fraunhofer plays down labor and points to production know-how.

Then the same model carries a line most readers skip.

A new 20 GWh European entrant pays around €1.5 billion more in ramp-up costs than an established Asian player building the same plant. Spread across the factory’s first production cycle, that figure can match the entire steady-state gap. The steady-state gap shows up in the model.

The ramp-up cost hides in delays and low yield.

What a slow ramp-up actually costs

Morrow shows the shape of the cost.

The company started in 2020 in Arendal with one 1 GWh line, Europe’s first LFP gigafactory, against an ambition of 42 GWh. By the May 2026 bankruptcy, cumulative funding exposure had passed NOK 5.1 billion, around $480 million.

The timeline tells the rest.

Morrow declared commercial start in January 2026. In March, it brought in Korea’s JR Energy Solution to help with electrode production. Electrodes determine much of the yield, and reaching outside for them late in the ramp-up showed that the line was still unstable. Deliveries to Proventia began in April, and the bankruptcy filing came in May. It was too late.

Along the way, work permit delays for Japanese and Korean technicians cost NOK 100 million and took 4 months. Acting chief executive Jon Fold von Bülow said there are no shortcuts to building stable and competitive battery production.

Scrap makes the cost visible.

Fraunhofer FFB and PEM at RWTH Aachen put normal scrap in cell production at 15% to 30% in the first years, and at around 10% after five years. In their model of a 40 GWh plant, each percentage point of scrap costs about €30,000 per day, or nearly €10 million per year. At 30% scrap, the plant loses about €900,000 a day.

During a slow ramp-up production, the factory keeps spending while too many cells fail inspection. Materials get consumed, labor gets paid, energy gets used, and depreciation runs. Little of that cost reaches the cells that a customer can buy.

Some scrap can be avoided before the line starts.

Design of Experiments (DOE) is an early testing that finds the right process settings before mass production. Process problems in mixing, coating, and drying are a leading cause of ramp-up scrap, and DOE can cut them (Source: Fraunhofer). Most makers still do too little of it, so the line sorts the problems out during the ramp-up, which takes longer.

The scrap that still comes off the line needs a plan. Two things decide how much of it comes back: rework and recycling.

Rework fixes problems early, at the electrode stage, and before the cell is finished, so the material can go back into the line. Once a cell is fully built, it usually cannot be reworked.

Recycling deals with the rest. Scrapped material still contains metals like nickel, cobalt, and lithium, and recovering them helps recoup some of the money lost during the ramp-up. It does not bring everything back. The labor and energy already spent are gone. Still, recycling scrap during the ramp-up helps a cell maker manage cash in the early months, when scrap is high and sales are low.

Delay adds a second bill.

Fraunhofer estimates the average loss of profit from a delayed start of production at about €1.1 million per day for the same 40 GWh plant. Reported start-of-production delays run from three to nine months, with an average of seven months.

Morrow blamed the market and a cooling investment climate. But its own list named industrialization delays, the ramp-up problem in plainer words. The line never reached stable yield, so the cash ran out.

Small delays became cash burn, and a line that cannot reach yield bleeds money long before it ships at scale.

The gap that opens after the equipment arrives

Northvolt shows the problem clearly.

Northvolt Ett in Skellefteå had an initial nameplate of 16 GWh. Internal figures reviewed by Dagens Industri put output at 79.8 MWh in the first nine months of 2023, about 0.5% of that target. BMW noticed. In June 2024, it canceled a €2 billion contract after Northvolt fell behind on deliveries and could not produce enough high-quality cells.

The equipment had arrived. The factory still had to turn it into a stable production system.

Norran, a Swedish media, later reported a difficult handover with one of Northvolt’s Asian equipment suppliers. Some lines were shipped to Sweden without factory testing after pandemic restrictions blocked routine checks, and Northvolt took the equipment rather than wait. Supplier engineers helped install and support it on-site. The problems persisted, and the delay lasted at least 10 months.

Peter Carlsson, the former chief executive, later called the decision a big mistake.

That shortcut made sense on a schedule. On the shop floor, it pushed unresolved work into Sweden.

A battery line is a process system.

Coating, drying, calendering, slitting, assembly, formation, aging, and inspection must all work together. A small deviation early in the line shows up later as yield loss or rejected cells.

That makes the supplier relationship matter from the start, before installation, through design checks, process-window definition, operator training, and shared access to the data that explains yield loss.

Reuters found Northvolt still missing internal targets in late 2024, with machine faults and inexperienced staff behind the shortfall. Northvolt disputed parts of the account and said some serial-production equipment ran well. Both can be true.

Some machines worked, some parts of the line improved, and the factory still could not turn out enough shippable cells fast enough.

Buying machines is the easy part.

Building the production system around them is where Europe continues to lose time. The Porsche Consulting and VDMA study notes that Asian makers hold more than 90% of global cell manufacturing capacity, supported by long relationships with their equipment suppliers.

Europe bought the hardware and often missed the relationship behind it.

Why the buying model slows the ramp-up

The contract can leave the hardest part with no clear owner.

Most equipment deals move through two acceptance steps. The factory acceptance test (FAT) is conducted at the supplier’s site, and the site acceptance test (SAT) is conducted at the buyer’s site. In many contracts, FAT and SAT close the formal handover before the line has reached stable qualified output.

A line can pass both tests and still be far from stable production.

There is a way to lower that risk before the line leaves the supplier.

A standard FAT checks that the machines run. A longer one runs them to make good cells at a real production rate, like a mini ramp-up before shipment. A workable bar for that mini ramp-up phase is Overall Equipment Effectiveness (OEE) above 70%, a measure of how much good output a line makes. The buyer can write that into the contract and hold the line at the supplier’s site until it clears the bar.

This costs more up front.

The supplier needs space, materials, and people to run the line longer. The buyer pays for that time. In return, more problems surface before delivery, not after, when they are slower and dearer to fix. It is the same logic as the rest of the ramp-up: spend earlier where the work is cheaper, or spend more later once the line is in the buyer’s plant.

The supplier knows the machines. The cell maker owns the product, the quality targets, and the customer qualification. Yield problems fall between those two worlds, and nobody fully owns them.

Procurement habits make the split worse.

The Porsche Consulting and VDMA study describes how early European factories bought turnkey lines from a single Asian supplier, struggled with ramp-up, then moved to buying machines piece by piece. European tenders also run 12 to 27 months before the planned start of production, long enough for the original line concept to age.

Both routes leave the same hole: too little shared responsibility for yield.

That is where the China comparison bites.

Established Asian players have deeper supplier relationships and more ramp-up experience. In practice, the supplier focuses on process definition, data sharing, training, and yield improvement.

In Europe, the relationship often stays transactional. Buy the line first, solve the ramp-up later.

That delay is expensive.

What buying the ramp-up looks like

A good equipment supplier earns its keep after delivery.

The hard work is the ramp-up, getting an installed line to reach high yield, above 90%.

Roland Berger and Porsche Consulting both describe the same shift, in which supplier value extends into ramp-up and line operations. At Battery Show Europe in 2025 and CIBF in 2026, integrators presented turnkey lines with ramp-up support and digital monitoring attached.

In practice, the supplier stays close before and after installation.

Engineers check the cell design against the line’s actual tolerances, test the process window before the line is called ready, and continue working with the cell maker’s process team through the ramp-up rather than leaving after acceptance. Once the line runs, equipment data keeps flowing back to the people who built the machines.

Hymson is bringing this model to Europe.

Hymson is a Chinese laser and automation supplier with lithium battery equipment across electrode manufacturing, CT inspection, cell assembly, baking, and module and pack production.

Its method relies on two steps before mass production: Design of Experiments (DOE), which tests the process window, and Design to Manufacturing (DTM), which ensures the cell design can run through the line without creating problems later.

Hymson says one pre-production validation surfaced 30+ DTM tasks, six of them unresolved defects that it estimates would have added more than six months of commissioning and over €3 million in equipment changes.

After delivery, the support continues on the floor. An expert team helps find bottlenecks, lift line efficiency, and trains the operators through the ramp-up. It also backs the line with a graded spare-parts service and remote monitoring.

A battery line should not first meet its process limits during mass production. The model works when the supplier and cell maker define the process window together, share the data behind yield loss, train the operators, and stay involved until the line reaches high yield.

Why the better model is hard to buy

Procurement is where the model breaks down.

A machine has a price. Ramp-up support has a moving boundary. It can cover process engineers before FAT, DOE work before shipment, shared data access, spare parts, operator training, remote monitoring, and support through the ramp-up.

That makes the comparison uncomfortable. The cheaper machine bid is visible on day one. Weak ramp-up support only shows up later, when scrap rises, commissioning drags, the start of production slips, or the customer refuses to qualify the cells.

So the old handoff survives.

Buy the equipment, sign FAT, install the line, sign SAT, and leave most of the ramp-up with the cell maker. The sequence is easy to manage on paper and a poor fit for battery manufacturing.

The alternative is to define the working relationship before the line is built. Spell out which data gets shared, which engineers stay involved, how the process window gets tested, and who leads corrective action when yield stalls. That is harder to score than a machine price. It is also closer to the real cost.

A cheap machine bid can become an expensive ramp-up.

Someone has to own the ramp-up

Ramp-up is the part of Europe’s cost gap that stays hidden. It lives inside delays, low yield, scrap, and missed qualification. The factory may have the equipment. It still needs a production system that can make cells customers accept.

European projects did not fail for one reason, but most paths led to the same place. High scrap broke the numbers, and it came from management choices made early.

Announced capacity is the wrong scoreboard. Qualified output is the number that decides the gap.

China shows the other model. Cell makers and equipment suppliers work the ramp-up together, check manufacturability before production, keep supplier engineers close through the ramp-up, and hold support in place once the line runs.

That closeness helped shorten the path from installed equipment to high yield.

Europe has to build that collaboration from the start, with shared data and shared responsibility for yield. The handover matters less than the yield curve. Public money can support that shift by paying for supplier involvement during ramp-up, rather than treating equipment delivery as the milestone.

Buyers can stop comparing machine bids as if the cheapest line makes the cheapest factory.

Europe cannot subsidize past the cost its own contracts keep creating. China’s lead comes from cheaper inputs and from the way its cell makers and equipment suppliers build the line together.

The gap starts to narrow when someone takes ownership of the ramp-up.

PS: To learn more about Hymson, visit their website below or stop by booth 1-B30 at Battery Show Europe next week.

I will be there too, meeting people and walking the booths. If you are going, reply to this email and we can set up a meet-up.

P.S. Whenever you’re ready, here are three ways I can help:

1. Battery industry reports

I’ve published two so far: The Battery Starter Kit, to help you get up to speed on the battery industry, and the CATL Company Profile, to help you understand how CATL operates and why it leads the market.

You can find them here: Battery industry reports

2. Consulting projects

I help companies answer battery-industry questions through a market lens: demand, technology adoption, competitive moves, customer segments, and value chain shifts.

If you’re working through a strategic question, reply to this email with a short note on what you’re trying to figure out.

3. 1:1 paid call

If you have a specific battery market question, I offer paid 1:1 calls when there is a clear topic to work through.

Reply to this email with the question, the context, and what decision you’re trying to make. If it is a fit, I’ll send the next step.