Manufacturing & Gigafactories Developed 2024 · C12 4 min
Empowering EU and North American Battery Makers to Become Competitive with China
Battery manufacturing competitiveness has become one of the defining industrial questions for Europe and North America. Chinese producers hold roughly 70 to 75 percent of the value across the entire lithium-ion cell chain, from raw material mining to cell assembly, and they do so at the lowest cost in the world. For a Western battery company, the central challenge is whether cost parity is achievable at all, and if so, where and how to build.
The Scale of Chinese Dominance
China did not reach its position by accident. Government policy set the direction in the early 2000s, requiring foreign entrants to form joint ventures for market access, then layering on subsidies for battery electric vehicles and plug-in hybrids from 2010. Programs such as Made in China 2025 and the New Energy Vehicle plan for 2021 to 2035 named battery technology a strategic priority. The result is a concentrated ecosystem. Chinese firms produce around 70 percent of cathode active materials, 85 to 90 percent of anode active materials, and more than 70 percent of all lithium-ion batteries. China also controls close to 100 percent of natural graphite anode capacity and a large share of critical mineral processing. Even the machinery and equipment supply base sits mostly in Asia, which raises the entry cost for any new Western plant.
A Market Under Pressure
The timing is difficult. European EV sales, which grew quickly from 2019 to 2021, slowed and then declined, falling 5.8 percent in 2024 against 2023, with drops in France, Italy, and Germany. Battery pack prices are falling by roughly 35 percent per year and are expected to approach raw material cost by 2030. Spot manufacturing costs in China for LFP packs and cells have reached around 75 and 53 dollars per kilowatt hour. Western profit margins have compressed sharply. High-profile setbacks illustrate the strain: a major European cell maker filed for bankruptcy protection, its largest automotive shareholder announced factory closures, and several planned gigafactories were cancelled or frozen. Investors have become cautious in a market marked by both commercial volatility and geopolitical risk.
Where Cost Parity Might Come From
Competing on China's own terms is not realistic across the board, so the case argues for selective positioning. Location matters: a producer needs a site with available workforce, low-cost and ideally low-carbon electricity, proximity to minerals or processing, strong logistics, and government support. Technology and application choices matter too. Rather than chasing every chemistry, a Western maker can focus on segments where regulation, quality, and sustainability credentials carry weight, and where the battery passport and circular-economy rules being introduced in the EU create a genuine differentiator. On the supply chain, the practical question is which minimum set of steps a new entrant must own to begin manufacturing, and which can be sourced or partnered, so that capital is not spread thin across a chain that Asian suppliers already dominate.
What It Means for the Industry
The lesson for the wider battery industry is that Western competitiveness will rest on policy alignment, focused technology bets, and secure access to critical raw materials, not on a like-for-like cost race. The EU has strong academic and industrial assets in the field, but those assets only translate into a viable industry if collection, processing, and manufacturing are supported with the same consistency that shaped China's rise. The alternative is deepening technology dependence at exactly the moment demand is meant to grow. Companies in the Global North need a clear-eyed reading of their own advantages, including regulation, recycled content, and regional logistics, alongside an honest view of where they cannot yet match Chinese economics.
Key Takeaways
China controls roughly 70 to 75 percent of the lithium-ion value chain, including about 70 percent of cathode active materials and 85 to 90 percent of anode active materials.
Battery pack prices are falling near 35 percent per year, with Chinese LFP spot costs around 75 dollars per kWh for packs and 53 dollars per kWh for cells, squeezing Western margins.
European EV sales fell 5.8 percent in 2024, and several planned gigafactories were cancelled or frozen amid market and geopolitical uncertainty.
Government policy, from joint-venture rules to Made in China 2025, was central to building China's dominance and offers a template for coordinated Western support.
Site selection should weigh workforce, low-cost low-carbon electricity, mineral access, logistics, and public support together, not in isolation.
Western makers are better placed to compete on regulation, sustainability, battery passports, and recycled content than on raw cost.
A new entrant must define the minimum supply chain steps it needs to control, since the equipment and materials base is concentrated in Asia.
Disclaimer: This case study was developed and presented by BatteryMBA participants as part of the Case Study Track. Views, analysis and recommendations are the authors' own. BatteryMBA does not take responsibility for the accuracy or completeness of the content and it should not be relied upon as investment, engineering or legal advice.
This is the public summary, the full case study lives inside the programme
Every BatteryMBA cohort runs the Case Study Track: small teams build the full recommendation, backed by a written document and a live presentation, supported by the BatteryMBA team. Full case study documents are not shared outside the programme. programme.