What Can We Do Right Now, Without Waiting for Policy? A Hub-and-Spoke Answer to Europe's Battery Problem

I spent Wednesday evening at a roundtable in Valencia on European battery sovereignty. The discussion was sharp, honest, and at times uncomfortable. I left with a clearer sense of both the problem and a path forward that doesn't require waiting for Brussels to fix the IAA, renegotiate the Korea FTA, or launch another battery alliance.

This is my attempt to pull the threads together.

The question that matters most

European battery policy has been trapped in a cycle of ambitious targets, delayed gigafactories, and subsidy structures that benefit incumbents more than they build capability. Northvolt's difficulties, the collapse of Britishvolt and Italvolt — these are not accidents. They are symptoms of a structural misdiagnosis.

The diagnosis has been: Europe lacks battery manufacturing scale. The prescription has been: build bigger factories faster.

Both are wrong.

The question worth asking instead is: what can industry actually do right now, without waiting for policy to move? I want to argue the answer lies not in more gigafactories, but in rethinking the manufacturing architecture entirely.

The real problem is where mistakes are made

Battery cell production has three stages: mixing, electrode coating, and cell assembly. If you want to understand why European gigafactories struggle, you need to understand what happens in the middle step.

The Fraunhofer Institute's 2024 ramp-up report is unusually candid about this. Electrode coating — where active material is applied to metal foil in precise, uniform layers — is where the overwhelming majority of manufacturing errors occur. Tiny variances in slurry viscosity, coating speed, or drying conditions cascade into batch-level defects. Entire production runs get scrapped. The process window is narrow, the feedback loops are slow, and the knowledge required to maintain yield is tacit — it lives in the hands and judgment of experienced engineers, not in equipment manuals.

High scrap rates during ramp-up are the central economic challenge facing European cell manufacturers today. But the cause matters as much as the symptom. The scrap problem is not an equipment problem or a chemistry problem. It is an accumulated process knowledge problem. Europe has been making batteries at scale for less than a decade, compared to Korea and China's two-plus decades. That gap doesn't close by building more factories. It closes by deliberately accumulating the right knowledge in the right places.

Why copying the Asian model doesn't work

Europe's response to date has been to replicate the Asian manufacturing model: large, vertically integrated gigafactories producing one or two standard cell formats at scale, targeting automotive OEMs as the primary customer.

This creates a second structural problem on top of the first.

These gigafactories are architecturally dependent on a single customer segment — automotive — in a market that is volatile, consolidating under price pressure, and increasingly served by Chinese and Korean manufacturers with structural cost advantages. When an OEM cuts its EV targets or delays a platform, a gigafactory doesn't just lose revenue. It loses the demand signal that justifies its entire existence.

Meanwhile, a substantial and largely unserved market sits right beside them. Heavy machinery manufacturers. Maritime equipment producers. Bus manufacturers. Military and defence customers. Each of these customers has specific cell format requirements, volumes that rarely exceed a few hundred megawatt-hours per year, and no viable European supply option today.

Gigafactories cannot serve them. The minimum viable order size, the format rigidity, and the scheduling logic of mass production all make these customers commercially invisible to the current model. Yet in aggregate, they represent a deep, resilient, policy-insulated demand base — exactly what a nascent European battery industry needs to survive automotive market volatility.

The Airbus model, applied correctly

Europe has a proven template for competing against vertically integrated industrial giants: distributed manufacturing across national specialisations, bound together by shared standards, governance, and integration capability. Airbus didn't try to replicate Boeing. It built a structurally different architecture — and won.

Applied to batteries, the logic is the same. There is no physical law requiring electrode manufacturing and cell assembly to happen under the same roof. That co-location reflects an Asian industrial tradition, not an engineering necessity. Separating them is not fragmentation. It is specialisation — and it unlocks a different competitive position entirely.

The proposal I keep coming back to is this: decouple electrode manufacturing from cell assembly, and build each part of the chain according to its own logic.

Cell assembly is more mechanical, more flexible, and more amenable to being located close to end customers. Small, distributed assembly units — designed around the specific format requirements of heavy industry, maritime, defence, and mobility customers — can serve the market that gigafactories ignore. Lower capital outlay. Shorter lead times. Commercially viable at volumes too small for a gigafactory to care about, but too large and too specific for customers to source reliably from Asia.

Electrode manufacturing is the harder, more capital-intensive, more knowledge-dependent part of the chain. It should be treated differently — concentrated, specialised, and built around genuine process expertise rather than spread thin across every cell assembly site in Europe.

The Korean question

The Korean battery ecosystem is not monolithic in its orientation toward Europe. Some players are actively looking for ways to embed themselves in the European market — to access subsidy structures, secure long-term demand, and hedge against concentration risk in Asia. That creates an opening that European policy, so far, has largely failed to exploit.

My argument is that electrode production should initially be sourced from Korean manufacturers — not as a concession to dependency, but as a strategic entry point. Korean players have spent two decades accumulating the process knowledge Europe needs. Engaging them as electrode suppliers to European cell assembly operations creates a working relationship and a dependency that runs in both directions: they need European market access; European assemblers need their electrode expertise.

Over time, this relationship should evolve into joint ventures — electrode foundries co-located in European industrial clusters, with Korean process knowledge and European market access combined by design. Regions like Valencia, with low energy costs, major port infrastructure, and proximity to Mediterranean industrial customers, are natural candidates. The critical structural requirement — the one that has been absent from EU battery policy so far — is explicit knowledge-transfer obligations built into the JV terms.

Not proximity-based hope that skills will diffuse across the fence, but contractual commitments that European engineers are trained, embedded, and eventually capable of running the electrode process independently.

This is how the knowledge gap closes. Not through policy mandates, but through commercial structures that make skill transfer in both parties' interest.

Making it bankable

One of the persistent frustrations in European battery investment is the financing gap between what policy promises and what the capital markets will actually fund. The problem is structural: gigafactory-scale projects require enormous capital commitments against demand projections that are inherently uncertain years into the future. Automotive offtake is volatile. Technology risk is real. The numbers rarely close comfortably.

The hub-and-spoke model, structured correctly, changes this calculus.

Small cell assembly units serving identified customers with specific format requirements and signed offtake commitments are fundable at a scale that doesn't require betting hundreds of millions on automotive demand forecasts five years out. The electrode supply from an established Korean partner de-risks the technology question — investors are not being asked to fund a process that has never been demonstrated at scale. The JV structure creates a credible path to local knowledge accumulation, which de-risks the long-term sovereignty question.

What remains is to structure the demand commitments from heavy industry, maritime, and defence customers who cannot currently access European cell supply and have strong incentives to do so. Those customers exist. The Korean partners willing to engage on the right terms exist. The cluster infrastructure exists in several European locations.

The missing element is a willingness to build the first spoke — to demonstrate that the assembly model works commercially, and to create the foundation on which the first electrode JV can be justified.

What can we do without waiting for policy?

The hub-and-spoke model does not require the IAA to be redesigned, the EU-Korea FTA to be renegotiated, or a new European Battery Alliance working group to convene. It requires a small number of European cell assemblers willing to build for underserved customers, a Korean electrode partner with reasons to engage, a cluster with the right cost and logistics profile, and customers ready to commit to offtake.

None of that is a policy ask. All of it is a commercial decision.

Europe has a habit of waiting for the right policy environment before moving on industrial strategy. The Asian battery industry didn't wait. It built, iterated, accumulated knowledge, and created the structural advantages that European policy is now trying to legislate away. That approach won't work.

The alternative is to build something structurally different — not a slower, more expensive version of what Korea and China already have, but an architecture that fits European strengths: distributed collaboration, specialised supply chains, and a deep pool of underserved industrial customers who need a supply partner they can trust.

That architecture is available. The question is whether European industry will build it before the window closes.

I work with European battery founders and industrial companies on supply chain structure decisions — particularly how to approach the electrode manufacturing challenge without the full CAPEX burden of vertical integration. If the model described here is relevant to a decision you're facing, I'm happy to think it through.