Factors behind repeated battery industry setbacks

Europe's Battery Ambitions Face a Reality Check: The road to establishing a strong, independent European battery value chain is proving tougher than anticipated. Recent months have brought significant turbulence, impacting several key players and raising questions about the continent's strategy. 📉 What's Happening? We've seen a series of setbacks: Northvolt's high-profile bankruptcy filing in March 2025 marked a major blow, despite billions raised. CustomCells filed for insolvency proceedings in April 2025, largely due to a major customer's failure, compounding industry pressures. ACC (the Stellantis, Mercedes-Benz, TotalEnergies JV) paused work on its German and Italian gigafactories, citing market conditions and likely needing a strategic shift towards lower-cost LFP batteries. FREYR Battery has pivoted its primary focus to the US, halting large-scale European cell projects, influenced by competition and US incentives. Morrow Batteries, while progressing with its LFP factory, faced significant delays and layoffs earlier this year, highlighting operational hurdles. This follows the earlier collapse of Britishvolt in the UK. 🔍 Why the Turbulence? Key Root Causes: These challenges stem from a confluence of factors impacting the nascent European industry: * Intense Global Competition: Established Asian manufacturers, particularly from China, benefit from massive scale, lower costs (often 30%+ cheaper), and control over supply chains. * High Operating Costs: Energy, labor, and capital costs are significantly higher in Europe. * Slowing EV Demand Growth: The pace of #EV adoption in Europe has moderated, impacting battery demand forecasts. * Manufacturing Complexity & Scaling: Ramping up complex, high-volume battery production efficiently is incredibly challenging for newer entrants. * Funding Difficulties: The capital-intensive nature requires huge, sustained investment, which is harder to secure in the current climate, especially after recent failures spooked some investors. * Supply Chain Vulnerabilities: Dependence on imported critical raw materials remains a key issue. * Policy Landscape: Incentives like the US Inflation Reduction Act (IRA) are actively drawing investment away from Europe. The Path Forward? These developments underscore the immense task Europe faces in competing globally. It highlights the need for a resilient, long-term industrial strategy, potentially involving more strategic partnerships, a focus on next-generation technology such as StoreDot #xfc, addressing cost competitiveness, and ensuring stable policy support. What strategies do you think are crucial for Europe's battery sector to succeed? #EuropeanBatteries #BatteryTech #Gigafactory #EV #ElectricVehicles #EnergyTransition #Manufacturing #SupplyChain #Innovation #CleanTech #Northvolt #ACC #Customcells #MorrowBatteries

Quality has been suffering in the battery industry. It’s the natural result of low prices and the need to hit sales quotas. In most industries this works itself out relatively quickly as early warranty returns pile up and manufacturers are forced to improve quality. The insidious challenge in the battery sector is that these quality issues often only show up months or years into operation.  Subtle imbalances in cell capacities and voltages are overlooked (or ignored) in a system made up of tens to millions of cells that all appear to meet initial specifications. As systems age, these come back to haunt you.  Those once subtle imbalances that met your production tolerances start to fail early.  With low price points, companies are incentivized to ship every cell and system they can — regardless of quality. It’s what bonuses are tied to.  Unfortunately, we’ll pay the price in the future. Now more than ever, OEMs need to prioritize testing and selecting reliable cells for their products. Quality validation needs to happen BEFORE cells are assembled into finished products and shipped to customers.  These quality issues are orders of magnitude more expensive when uncovered after assembly or, worse yet, in the field.  The ability to catch these issues early will be the core competitive advantage in 2025 and beyond.

The battery manufacturing landscape is facing some significant turbulence right now, with many manufacturers cancelling, pausing, or postponing the development of new battery factories for the EV market. What’s driving this upheaval? One of the major factors is a stark imbalance between innovation and manufacturing expertise. Western countries excel in innovation and R&D—we see groundbreaking advancements regularly. However, when it comes to the nuts and bolts of large-scale manufacturing, especially in battery production, they lag significantly behind their Asian counterparts. Countries like China, South Korea, and Japan have a well-honed manufacturing infrastructure, coupled with decades of experience in battery production, giving them a massive competitive edge. But that’s not the only issue. The market is also experiencing a seismic shift from NMC (Nickel Manganese Cobalt) batteries to LFP (Lithium Iron Phosphate) batteries. LFPs are cheaper, safer, and more abundant in supply, which makes them highly attractive, especially in an economic climate where cost control is critical. However, this shift is causing disruption in supply chains and creating uncertainty among manufacturers who have invested heavily in NMC technology. On top of these factors, the economic pressures of rising raw material costs, regulatory challenges, and the race to secure supply chains in an increasingly competitive global market are causing many companies to hit the brakes on new projects. It’s a complicated and, yes, frustrating landscape. But here’s the controversial take: Maybe it’s time for the big players in the West to admit that we need to do more than just innovate—we need to seriously ramp up our manufacturing capabilities. Without bridging that gap, we risk falling further behind, watching as the future of energy storage is built elsewhere. Is it time for a manufacturing renaissance in the West, or are we destined to be perpetual innovators, letting others reap the rewards of our R&D efforts? What do you think—can the big players in the West catch up in manufacturing, or is the gap too wide? 👉 Jesse Morris 🔔 Follow Jesse Morris for interesting posts on: #BatteryTech, #Sustainability and #GreenTechnology Tags: American Battery Factory Inc., ACC - Automotive Cells Company, Farasis Energy, Ford Motor Company, FREYR Battery, Innolith, InnoBat, Italvolt , KREISEL Electric, Microvast, Northvolt, Our Next Energy (ONE), Stellantis, SVOLT Energy Technology (Europe) GmbH

Decoding Northvolt's Fall: The Hidden Role of Tacit Knowledge in Europe's Battery Ambitions Imagine you’re a physics PhD. Does knowing the basic mechanics of cycling mean you can immediately ride a bicycle? Can you effortlessly balance, pedal, and steer simultaneously? The answer is a clear “No.” The missing ingredient is tacit knowledge—the intuitive, experience-based know-how that can’t be fully taught through formal education. Tacit knowledge is acquired through personal experience, practice, and observation. It’s particularly crucial—but often underrated—when managing complex systems and processes. Northvolt’s story of challenges and setbacks illustrates this gap in stark detail. 1. Inadequate Battery Manufacturing Expertise Observation: Northvolt's leadership included former Tesla executives, but their experience was rooted in Tesla’s supply chain management rather than battery manufacturing itself. Tacit Knowledge Gap: Scaling battery cell production demands deep, hands-on familiarity with material behavior, precision manufacturing, and troubleshooting—skills developed through years of direct experience in the field. 2. Mismanagement of Equipment Procurement Observation: Northvolt ordered machinery from Chinese suppliers but submitted poorly written specifications, resulting in equipment that didn’t meet their needs. Tacit Knowledge Gap: Drafting precise technical specifications and ensuring operational compatibility require implicit expertise in equipment design and integration—knowledge that comes from practical exposure rather than theoretical understanding. 3. Production and Quality Control Challenges Observation: Northvolt faced high defect rates and inconsistent production quality, leading to significant waste and inefficiencies. Tacit Knowledge Gap: There is a world of difference between producing a high-quality battery (successfully demonstrated by Northvol) and consistently producing 100.000 high-quality batteries in a row. It requires operators and managers to grasp the nuanced interplay of material properties, machine settings, and environmental factors. This expertise is built over years of iterative practice and problem-solving on the production floor. https://lnkd.in/eZ3H_-5x

The latest Porsche Consulting study “Battery Manufacturing 2030+: From Hype to Hard Truths” delivers sobering news for #Europe. Europe’s 2030 gigafactory capacity forecast has been slashed from 1.6 TWh down to just 750 GWh – a 53% reduction driven by funding gaps, execution delays and industrialization risks. The study describes European gigafactories as trapped in the “Trough of Disillusionment” – enthusiasm has given way to execution challenges, cost pressures and competition from US IRA incentives that are pulling manufacturers away from Europe. At the same time, Chinese and Korean giants like CATL, EVE, LG and SK now account for almost half of Europe’s remaining projected battery capacity. Yet the study identifies one major opportunity: brownfield upgrades. Rather than building new gigafactories from scratch, retrofitting and modernizing existing plants – integrating new technologies, improving efficiency, adding advanced process steps – represents an estimated €135 billion market by 2035. This is where European equipment suppliers with deep process know-how can compete. #recap

The DOE has officially canceled over $700M in battery manufacturing grants, impacting companies like Ascend Elements and Anovion Technologies. It’s a setback, and it’s okay to call it that. These weren’t abstract R&D dreams. They were real projects tied to the U.S. effort to build a domestic battery supply chain - recycling, anode materials, and critical manufacturing capacity. The fact that they’ve been pulled back says something deeper about where we are as an industry. As Tal Sholklapper put it, we’ve entered “the grit era of batteries” and there isn't a better way to put it. ⚡ What this really signals The bar is higher than ever. Funding isn’t about potential anymore, it’s about proof. Companies have to build, not just announce. We need execution, not theory. The next phase of this ecosystem depends on people who can get us past pilot scale, who can turn chemistry into capacity. The workforce is the linchpin. If we want to compete globally, we need to invest just as much in the people scaling these factories as we do in the tech inside them. 🔋 Why this still matters The U.S. battery sector is at an inflection point. We don’t need more “promising” startups. We need durable ones. We need builders. Engineers, operators, and leaders who can actually bring these facilities to life and make them commercially viable. So yes, it’s a setback but it’s also a filter. It’s forcing us to back companies with real ideas, real execution, and the talent to pull it off. Because in the "grit era" of batteries, only those who can deliver will define the next wave.