Bridging the global cost gap in battery cell manufacturing - From locational factors to factory planning, and policy design

The accelerating demand for lithium-ion battery (LIB) cells necessitates a strategic, cost-competitive, and resilient battery production landscape. This study combines a battery market structure analysis with an extension of a technoeconomic cost model to assess the impact of factory planning, location-specific factors, and policy instruments on LIB production economics. While the political stability, the energy mix, and the financial incentives shape site attractiveness, a scenario analysis demonstrates that China's cost advantage stems less from geographic location and more from lower material and equipment costs and superior production efficiency. Ramp-up delays are identified as a major cost risk, particularly in later stages, where weekly delays can add costs of $1 M per GWh of annual output. Furthermore, different policy tools are compared, including direct per-kWh subsidies, investment-based payments, and import tariffs. Only sustained operating subsidies substantially reduce production cost gaps compared to China, while one-time incentives show limited impact. To balance cost-effectiveness and fiscal feasibility, a combined approach of different measures may be beneficial. The findings of this work underscore the importance of aligning industrial policy, factory planning, and research investment to secure sustainable competitive advantages in the evolving global battery market.