Europe talks a lot about raw materials, support programs and strategic self-sufficiency. But according to Daniel Jimenez Schuster, managing partner and co-founder of iLiMarkets, the real problem in the European battery industry lies in a completely different place. It is not a lack of lithium, but a series of technological mistakes that have set the continent back years.
Schuster knows the development from his own experience. He has been active in the lithium industry since the late 1990s, initially with the Chilean producer SQM, later as a consultant for companies, investors and governments worldwide. “The central bottleneck is not the raw material itself, but rather the know-how in cell production and the costs of cell production,” he says in an interview with Elektroauto-News. This is exactly where Europe lost a strategic bet.
Europe is relying on the wrong technology at the wrong time
While China was an early adopter of lithium iron phosphate cells, the West decided to take a different approach. Europe and the USA focused on NMC cells with nickel, manganese and cobalt. These offered a higher energy density and were considered ideal for high-quality vehicles. “Europe said: We need high energy density for our premium cars,” says Schuster, describing the logic at the time.
China, on the other hand, consciously relied on LFP. The technology was cheaper, easier to scale and initially less powerful. But Chinese manufacturers consistently invested in process knowledge, material optimization and scaling. “The Chinese have managed to gradually increase energy density while maintaining the cost advantage,” he continued. This meant that the performance difference shrank, while the cost advantage remained.
This development has long been underestimated in the West. LFP was considered a dead end, not a learning technology. “The West underestimated the ability of Chinese industry to further develop this technology,” said Schuster.
A residue with a chain reaction
The consequences of this decision extend far beyond cell chemistry. Today LFP dominates the market for stationary storage, increasingly in the automotive sector. Western OEMs that didn’t want to talk about LFP a few years ago are now also relying on it. Many originally planned NMC cell factories are currently being converted. “As a result, the West has actually lost about five years,” summarizes Schuster.
This loss of time affects the entire value chain. Without competitive cell manufacturing, there will be no relevant need for cathode materials, chemical production or lithium processing. “The upstream follows the downstream, not the other way around,” he emphasizes. Europe has politically focused heavily on access to raw materials, while the industrial center is missing.
Today, China not only benefits from technological maturity, but above all from economies of scale. Large production volumes reduce costs, accelerate learning curves and further strengthen competitiveness. “China has a huge advantage through scaling,” said Schuster. This cannot be caught up in the short term – at least not in the current battery generation.
In his view, it is unrealistic for Europe to catch up with China in this technology window. The lead is too big, the time is too short. “I think it is very difficult for the West to catch up with this battery generation.” Instead, only one realistic option remains: cooperation.
Schuster advocates specifically bringing Chinese companies to Europe and enabling local cell production. Not as a sign of weakness, but as an industrial policy necessity. “Partnerships with Chinese companies are fundamental if the West wants to learn and catch up,” he says. This is the only way to create an incentive to build upstream industries.
At the same time, he warns against the illusion of being able to enforce self-sufficiency through the extraction of raw materials. Projects like Direct Lithium Extraction may be technologically interesting, but they do not change the structural problem. “As long as cell production does not take place in Europe, there is no economically viable reason to extract lithium here on a large scale.” Otherwise, Europe would produce expensive lithium, export it to China and later buy back battery cells.
Five years as a reminder
For Jimenez Schuster, looking back on the last few years is more than just an analysis. He is a warning. Technology decisions, according to his message, are not questions of detail. They determine learning curves, cost structures and industrial power relations over decades. Europe gambled away – not because it was incompetent, but because it set the wrong priorities.
“The real problem is not lithium, but a lack of know-how and a lack of scaling,” the expert concluded. The five lost years could not be regained. But they could be a lesson if Europe is prepared to place industrial policy reality above political ideals
date: 2026-02-14 10:51:00