When I describe how a battery cell is made, the analogy I have is baking a cake. You need good ingredients and every step done right through to the end, otherwise the cake does not rise, and you only find out when it comes out of the oven. A battery cell manufacturing process works the same way, with its quality only proven at formation and testing. A good chef can bake one perfect cake. A bakery must bake ten thousand identical cakes every morning, at a price the supermarket will pay, and that is where most of the money and risk sits.
Battery cell manufacturing has the same problem on a far larger scale. A cell that performs well in the laboratory is a long way from a plant that can make it repeatably, at volume and at a cost customers will pay. In Europe, the planned cell pipeline fell by 29% between January 2025 and May 2026, from 1,180 GWh to 841 GWh, and Northvolt, Morrow and ACC's Kaiserslautern plant have all collapsed or been cancelled. In the United States, $11 billion of battery projects were cancelled in 2025 against $8 billion announced.
This year I carried out an independent technical scale-up assessment for an EIB-financed battery project, following pilot line and gigafactory programmes in the UK and Europe. Two questions come up every time: why cell plants struggle between the pilot line and the gigafactory, and how an investor can tell whether a project is ready for the next stage of funding.
Why Do Cell Plants Struggle at Scale?
In most cases the cell chemistry is sound. The difficulty sits in the manufacturing systems, processes and data built around it. Fraunhofer FFB and RWTH Aachen report scrap rates of 15 to 30% in the first years of a gigafactory ramp-up, around 10% after five years, and a cost of about €10 million a year for each percentage point at gigafactory scale. As one European gigafactory CEO put it, once scrap goes above 50%, cheap energy and free land make no difference.
Most of the vital process knowledge sits with equipment OEMs and partners. Early cells are often made by research centres and contract partners using the start-up's own recipes. Unless the process settings, lessons learnt and operator know-how are documented and transferred, the company's own pilot line takes far longer to commission, document and staff.
Often equipment specifications are not fully defined, because there are still many unknowns. Without specifications and contracts owned by the business, the vendor quotation becomes the specification, and it is very difficult, sometimes impossible, to hold a turnkey supplier to yield, rate and acceptance criteria.
The business and cost model assumes a mature factory from year one. Steady-state yield and equipment efficiency in the first year of production make a business case look strong on paper, then run it short of cash during the ramp-up, exactly when it most needs its lenders' confidence.
What Is the Difference Between Technology and Manufacturing Readiness?
Most battery projects are described using Technology Readiness Levels (TRL), which measure whether the technology works. Manufacturing Readiness Levels (MRL), set out by the UK Automotive Council, measure whether a product can be made repeatably, at the target cost and volume, by the business's own people and processes [5]. Figure 1 shows how the two scales line up from the laboratory, through the prototype stage and the pilot line, into full production.
Figure 1. Battery cell scale-up from laboratory to production, with TRL (top) aligned against MRL (bottom).
For a battery cell the ladder is very practical. MRL 3 and 4 are reached in the laboratory and with prototype partners. MRL 5 is reached while the pilot line is built and commissioned, with the company's own team making electrodes and sub-assemblies on production-type equipment. MRL 6 and 7 follow when the pilot line makes complete cells and then runs at rate under control plans, and that evidence de-risks the gigafactory, where MRL 8 to 10 are achieved.
It is common for a start-up to reach TRL 6 while sitting at MRL 3 or 4, because its cells have been proven with partners before it has its own production environment. That gap is normal at this stage and should be stated honestly in the investment case. The pilot line is bought once and produces MRL 5, 6 and 7 in sequence, so an investor can release funding in stages, each against evidence.
How Are Funders Responding?
Lenders and governments are moving in the same direction. The EU's €1.5 billion Battery Booster offers interest-free loans to plants in ramp-up, assessed on their technical and financial maturity, and the EIB tests the credibility of the industrialisation plan alongside the technology. In the United States, the 45X credit pays $35 per kWh of cells produced, so it only arrives once the plant is making good cells. In the UK, the Gigafactory Policy Commission says the next 12 to 18 months will be decisive and wants new chemistries scaled with a focus on manufacturability.
There are significant opportunities; grid storage is growing in all three regions, and drones, robotics and defence need cells made by a sovereign supply chain. The companies that win this work, will be those that can evidence their manufacturing readiness and deliver cells reliably at the right price.
Five Gigafactory Readiness Questions to Ask
When I review a cell project for a board or an investor, these are the five questions I start with. In my experience the answers say more about the risk in a project.
⦁ Could the company build its next 1,000 cells without its partners? If not, the plant is being planned around knowledge the business does not yet hold, and the pilot line will spend its first-year rediscovering settings that exist elsewhere. Good evidence is controlled recipes, process windows and formation protocols held in the company's own systems and named people who have run each process step.
⦁ Who wrote the equipment specification, and what is the supplier paid against? If the vendor wrote it, acceptance tests can only measure what the vendor offered. Good evidence is a User Requirement Specification owned by the business, covering rate, yield, quality and data interfaces, with payment milestones tied to acceptance against it.
⦁ What happens to the cash if scrap stays at 25% for two years? Most ramp-ups run slower than planned, and scrap at the levels Fraunhofer reports consumes cash faster than most business plans show. Good evidence is a ramp-up curve based on industry experience, a sensitivity analysis on scrap and yield, and funding headroom for the slow case.
⦁ When a cell fails in the field, can the company trace it back to the electrode batch? From February 2027 the EU Battery Regulation requires a Battery Passport for electric vehicle, light means of transport and industrial batteries over 2 kWh. If the data architecture is designed after the equipment is ordered, the machines arrive without the interfaces the MES and ERP systems need. Good evidence is a traceability specification written before equipment is ordered, covering genealogy from raw material lots to the finished cell.
⦁ Who will run the plant, and are they learning on the pilot line now? Fraunhofer identifies the shortage of skilled people as a main cause of slow ramp-ups. The pilot line is the best training ground a cell business will have, and its team becomes the core of the plant launch team. Good evidence is a launch team plan tied to the pilot line schedule, a skills matrix for each process step, and APQP, FMEA and control plans already in use.
The Bottom Line
Battery scale-up is a manufacturing challenge as much as a technology one, and manufacturing readiness can be measured. A clear MRL position, backed by evidence, gives businesses a plan they can deliver and investors a way to release money step by step. The projects that put this in place before asking for plant funding are the ones most likely to still be making cells in five years' time.
References
[1] Benchmark Mineral Intelligence, "Morrow files for bankruptcy as European-owned cell capacity continues to fall", 7 May 2026.
[2] Center for Strategic and International Studies (CSIS), "A New Phase for the U.S. Battery Industry", April 2026.
https://csis-website-prod.s3.amazonaws.com/s3fs-public/2026-04/260427_Cai_New_Phase_0.pdf
[3] Fraunhofer FFB and RWTH Aachen PEM, "Mastering Ramp-up of Battery Production", white paper, October 2024. https://www.ffb.fraunhofer.de/en/press/news/the-ramp-up-of-a-gigafactory-in-battery-cell-production.html
[4] Energy-Storage.news, "Over 50% scrap is not sustainable: European battery industry looks to learn from mistakes of the past".
[5] Automotive Council UK, "Automotive Technology and Manufacturing Readiness Levels", January 2011. https://www.automotivecouncil.co.uk/wp-content/uploads/2011/02/Automotive-Technology-and-Manufacturing-Readiness-Levels.pdf
[6] European Commission, Battery Booster Facility, Innovation Fund call, 2026, as reported by ESS News, 11 August 2026.
[7] UK Gigafactory Policy Commission, recommendations published 21 January 2026 (Faraday Institution).
https://www.faraday.ac.uk/uk-gigafactory-policy-commission-news-release-jan2026/
[8] Regulation (EU) 2023/1542 concerning batteries and waste batteries (EU Battery Regulation).
