Is the Way European Industry Builds Batteries Broken?
Europe’s approach to the ‘battery race’ has so far resulted in gigafactories creating less competitive, more expensive cells. Instead of chasing a genie that’s already out of the bottle, the UK should harness its inherent strengths by pioneering pack-level innovation. It is here that we have a real opportunity to lead the charge in next-generation battery technologies.
While China dominates battery cell production, Europe struggles with high costs, a supply chain reliant on raw materials from China, and simply not enough production capacity. Establishing a battery cell gigafactory factory here is 47% more expensive (roughly 100 million EUR/GWh) than in China, with operating costs up to 70% higher, according to the European Commission.[1]
Despite the hype around gigafactories, setbacks like Britishvolt and Northvolt remind us that the path to scaling battery cell production is hard. Boom-or-bust investments, delayed or cancelled EV programmes, and the challenges of attracting investment raises important questions about Europe’s approach. The Faraday Institution estimates that the UK alone will need six large gigafactories by 2030 to meet domestic demand.[2] Projects like Tata’s Agratas in Somerset (40 GWh by 2026) and AESC’s Sunderland expansion (15.8 GWh) signal the scale and the challenge ahead. But they also hint at the opportunity to redefine our strategy and brighten the gloomy outlook for the European battery industry.
To stay competitive, the UK has an opportunity to lead in next-generation battery technologies. But instead of chasing high-volume, low-cost cell production, starting with blank sheets of paper each time, let’s instead focus on our true strengths. Rather than playing catch up in domains where Asia now has an (arguably) insurmountable head start, let’s focus on where we can find differentiation and genuine advantage.
We believe that the future of European battery manufacturing hinges on shifting focus away from commoditised cells using today’s technologies, and towards pack-level innovation, alongside some investment in next-generation cell technologies. The truth behind the gloomy headlines is that, while high-volume cell production is becoming commoditised, pack-level innovation remains largely untapped. By rethinking how cells are integrated, we can deliver real value to vehicle manufacturers and, dare I say, give EVs more soul. In internal combustion vehicles, the powertrain was often a turnkey solution dropped into a chassis – hence the expression ‘crate engine.’ In electrification, however, the battery defines a vehicle’s performance and character entirely. In the UK we have a rich history of structural design expertise – think aluminium chassis, motorsport composites, and a ‘less is more’ design philosophy that has made British engineers some of the most sought after in the world. It is this expertise that can enable us to ‘win’ in the battery ‘race’. Take commoditised battery cells from primarily Asian manufacturers (often with a localised, European manufacturing footprints), but then bring these together with world-class, structural design, servicing the exact needs of UK and European automakers to create ‘zero compromise’ solutions.
Niche manufacturers, producing fewer than 10,000 units per year, represent a significant share of global battery demand. The NVN Sector Mapping Study reports that in the UK alone they generate up to £7 billion in turnover. These companies, alongside their global counterparts, are driving demand for specialist battery solutions over high-volume standardised packs, so the opportunity is even more substantial where success is tied to rapid iteration, rather than sheer scale.
We should embrace some motorsport-inspired creativity to transform our approach, winning with agility, flexibility, and novel fabrication methods that allow us to move faster than traditionally thought possible. Britain is home to many innovators like IONETIC, demonstrating how it is in fact possible to create battery packs that are both truly bespoke and cost competitive, whilst also being delivered in timeframes as little as half that of traditional automotive programmes. This is inspiration for a different way forward. Here are three insights into the shift that’s already started.
1. Cells are becoming a commodity – focus on added value instead
Asian players already enjoy the benefits of scale and cost efficiency. Simply trying to copy-paste the gigafactory model leaves Europe playing perpetual catch-up, producing less competitive cells, at higher cost, creating a false dawn for European consumers. While Asian-European collaborations and specialist European cell manufacturers have their place, a zero-to-hundred approach in cell production is not how Europe wins. The real opportunity lies in pack-level innovation. By focusing on advanced pack design, we can enhance energy density, reduce weight, and tailor performance to the unique needs of each application.
Here we definitely can win.
2. Moving faster and the advantage of agility
What if, instead of chasing gigafactory scale, Europe embraced a more agile, localised approach to battery pack manufacture? Speed is critical in today’s market. Europe can excel by adopting a more agile approach to battery pack development. Smaller, flexible production systems allow for quicker adaptation to new technologies and faster delivery of custom battery packs.
Lower volume vehicle programmes stand to gain the most as they thrive on innovation and performance rather than scale. There is an opportunity for European industry to lead the way by developing novel fabrication systems and assembly methods. At IONETIC, we believe that a battery pack is more than the sum of its cells, it’s the core component of the vehicle’s performance, safety and efficiency.
We are applying a novel approach to battery manufacturing, integrating automation, custom engineering and scalable design to build battery packs faster, more affordably, and with a higher degree of customisation. Our software-accelerated Arc system combines proprietary software, adaptable hardware, and innovative fabrication techniques to streamline design, manufacturing, and integration, significantly cutting development time. This agility plays to our technical strengths and positions us to better serve OEM customers in the UK and Europe.
3. ‘Going custom’ – a new territory for niche OEMs
For many European OEMs in low-volume segments, customisation and rapid iteration are far more valuable than scale. Legendary British sports car marques have long relied on turnkey engines. As a complete assembly, it can simply be dropped in, with the rest of the vehicle a blank canvas that can be worked on largely independently. When it comes to EVs, it’s a whole different story. To develop a compelling EV, the battery will define the vehicle’s performance and character: it’s not just a component – it’s the foundation.
A well-designed pack working in harmony with the vehicle architecture is key to enabling the driving dynamics and brand identity European customers demand and expect. For this reason, the current ‘off the shelf’, ‘one-size-fits-all’ approach of standardised battery packs is a compromise OEMs simply don’t want to make. ‘Going custom’ enables superior performance, agility, weight savings, and enhanced safety, differentiating and elevating their vehicles.
By applying Europe’s engineering strengths to pack-level technology, we can bridge the gap between off-the-shelf batteries and prohibitively expensive bespoke programmes. IONETIC’s custom battery packs deliver faster turnaround times, cost efficiency, and superior performance through locally developed, modular, and flexible fabrication systems, offering niche OEMs the agility they need to stay ahead.
So, is the way European industry builds batteries broken?
Not broken, but misdirected. Europe cannot rely on government subsidies or private investment to mimic high-volume Asian strategies. Instead, let’s invest in the technologies and innovation where we can truly win.
The capabilities exist in the UK and across Europe, and financial constraints and lower production volumes are daring us to think differently. Let’s harness innovation, speed, and some genuinely left-field thinking to carve out our niche in powertrain electrification.
By recognising that battery cells are becoming commodities and shifting our focus to where we can add the most value by making electrification not only possible but compelling for every OEM, regardless of volume, we can create a future where European battery technology not only survives, but thrives.
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Is the Way European Industry Builds Batteries Broken?
