Manufacturing & Gigafactories Developed 2024 · C11 4 min
European Gigafactory for Heavy Machinery
Planning a European gigafactory for heavy machinery batteries means answering hard questions about chemistry, location, partners, and how to enter a market with minimal intellectual property and supply chain dependencies. This case study follows the board of a long-established European tier one supplier to the automotive, mining, construction, and material handling industries as it runs a feasibility study on entering battery production under the mission to build the most European, green gigafactory possible.
The Strategic Rationale
The supplier at the centre of the case has operated for over 50 years, with global R&D and production and the financial strength to make significant new investments. Electrification of its customers' products is driving battery demand, and batteries will make up a large share of those product costs in future. Combined with the European Union's push to build domestic battery intellectual property and reduce supply chain reliance on external sources, this led the board to a mission focused on European content across raw materials, machinery, and equipment. The feasibility study is organised around core questions: which partners and level of vertical integration a newcomer needs, which chemistry and location to choose, how to approach customers for binding or indicative offtake, and why to remain in Europe rather than chase Inflation Reduction Act incentives in the US.
Sizing the Market
Rather than exhaustively quantifying demand up front, the team judged the niche large enough for an additional supplier and then modelled it. The European electric truck market is estimated at 1.12 billion US dollars in 2024, projected to reach 10.76 billion by 2029 at a 57 percent compound annual growth rate. The electric bus market runs from 1.76 billion to 3.48 billion over the same period. Electric forklifts, a major slice of material handling, grow at around 12 to 13 percent per year toward a market of 48.6 billion to 74.2 billion by the early 2030s, while construction equipment is smaller but expanding fast. Using a top-down approach based on battery packs sold and capacity per vehicle, the team sized the plant under three market coverage scenarios. At 5 percent coverage the factory would need 0.37 to 0.85 gigawatt-hours, at 10 percent 0.74 to 1.69 gigawatt-hours, and at 15 percent 1.13 to 2.54 gigawatt-hours.
Chemistry, Requirements, and Integration
All customers operate business to business and deploy products in harsh, sometimes enclosed environments such as construction sites, mines, and warehouses. Requirement categories overlap across segments, but their weighting differs by application, and this drives chemistry selection. Safety illustrates the point: mechanical safety demands are higher in construction and mining, while the risk of thermal runaway is most critical in populated, enclosed spaces like production floors and warehouses, which is partly why lead-acid batteries remain popular there despite weaker performance. In heavy-duty applications, nickel manganese cobalt and lithium iron phosphate dominate, NMC for high energy density and LFP for thermal stability, safety, long life, and improving cost competitiveness. Emerging chemistries are on the radar too, including lithium manganese iron phosphate nearing mass production and solid-state cells, where one major truck maker has invested in the technology. On vertical integration, the supplier could sell cells and leave pack and vehicle integration to customers, or offer the full chain up to finished integration, and it also weighed whether to move upstream into precursor materials.
What It Means for the Industry
The case illustrates how an established industrial supplier can enter batteries by leaning on existing customer relationships, engineering heritage, and financial strength rather than starting from scratch. Choosing a market niche with relatively consistent battery requirements, sizing capacity against realistic coverage scenarios, and selecting proven chemistries all reduce risk for a newcomer. The decision to stay in Europe reflects proximity to customers, shorter delivery distances, access to regional raw materials and equipment, and alignment with EU policy on domestic battery competence, weighed deliberately against the pull of US incentives.
Key Takeaways
The mission centred on maximising European content to reduce IP and supply chain dependencies.
The European electric truck market is forecast to grow at roughly 57 percent annually to 2029.
Plant sizing ranged from 0.37 to 2.54 gigawatt-hours depending on 5 to 15 percent market coverage.
Requirement weightings differ by application, which drives the choice of battery chemistry.
NMC and LFP dominate heavy-duty use, with LMFP and solid-state as emerging options.
Vertical integration options span selling cells only to delivering fully integrated battery products.
Staying in Europe reflects customer proximity, regional sourcing, and alignment with EU battery policy.
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.
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