By Emma Nehrenheim, Managing Director of the European Battery Alliance
This article was originally published on Sustainable Views, a subsidiary of the Financial Times available here
The struggle to scale battery cell production rapidly in Europe has been well documented in recent months.
I know this first hand as my former employer, Northvolt, has often been in the spotlight. To some, these challenges are seen as uniquely European: strong research and innovation, but less able to turn innovation into large-scale industry.
The reality is both more mundane and more hopeful: Europe’s battery sector is experiencing the normal growing pains of being built from scratch. These are predictable challenges that come with building complex industrial capacity under tight timelines and fierce global competition.
Battery manufacturing is not a plug-and-play business. It requires more than 100 tightly controlled, interdependent steps carried out in clean-room conditions. Scrap rates of 15–30 per cent during early production are standard. Even the most advanced Chinese producers faced similar hurdles in their early years.
While Europe entered the battery race later than others, it is worth remembering what has been achieved. Prior to 2017, there was no battery industry to speak of.
Since then, Europe has mobilised more than €200bn in public and private investment, announced more than 30 gigafactories, and established a growing upstream and recycling ecosystem. That is a remarkable achievement.
Producing at scale requires support
But producing at scale needs real support. In China’s case, this was backed by generous state support — in some cases, nine times higher than what European companies have received. That skews the market and piles additional pressure on producers still navigating the ramp-up phase.
Urgent support for European battery cell makers is now required for two phases. The first is the ramp-up period — typically between two and three years — when manufacturers are fi ne-tuning equipment, reducing scrap and training workforces, while generating little to no revenue.
The second is the early production phase, spanning five to six years, when companies work to improve efficiency, reduce costs and move towards being competitive.
For the latter, temporary output-based support is the answer. This is public funding tied directly to the number of battery cells produced and delivered to customers.
It is a proven tool, already used in Asia and North America. It enables new cell makers to sell to carmakers at a competitive price and builds investor confidence.
No strategic industry, whether semiconductors, aviation or automotive, has scaled without sustained public investment. The goal is not to shield companies from market forces, but to help them survive long enough to compete.
National funds have been vital to getting projects off the ground in Europe. But under state aid rules — even the recently revised ones — national governments are still not able to provide output-based support.
That is why a European solution is also needed. The European Commission announced a €3bnpackage back in 2023, but it has been slow to reach the market.
What is left of it — €1.8bn under the EU’s Innovation Fund — must now be directed urgently to output-based schemes. This would enable the production of the first 90 gigawatt hours of batteries by 2027, enough to power 1.2mn electric vehicles with EU-made cells.
If Europe gets this right, batteries could become the backbone of its next industrial chapter. If we get it wrong, the continent will be buying battery cells from elsewhere for decades to come, leaving its own automotive sector — which represents 7 per cent of current GDP — highly exposed.
Homegrown battery production is the first true test of Europe’s ability to industrialise clean technologies at scale. Failure would undermine investor confidence and cast lasting doubts on the continent’s ability to deliver on its industrial ambitions or hold its position in the global race.
This is not fate — it is a choice.
