What scrap rate measures, and how high it runs
A battery cell factory does not turn every batch of material it starts into a battery that can be sold. The share that never becomes a sellable cell is called the scrap rate. A joint white paper from Fraunhofer FFB, a public battery research institute in Germany, and RWTH Aachen, a university engineering department, states that a scrap rate of 15% to 30% is common in the first years of battery cell production, and that even after 5 years of running, a plant still typically scraps about 10% of what it attempts to make. The white paper states this pattern applies not only to European startup battery plants but also to established Asian cell manufacturers that build factories in Europe copied closely from their own designs in Asia. The same white paper compiles scrap rate ranges from 5 earlier, separately published studies, and those ranges vary even more, from as low as 4.0% up to 30.0%.
Compiled by the same Fraunhofer FFB and RWTH Aachen white paper that the central figures in this article come from, from 5 separately published studies with no common time period stated.
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| Schunemann, 2015 | 4.0% to 15.3% |
| Hanisch and coauthors, 2015 | 5.9% to 15.2% |
| Kehrer and coauthors, 2021 | 5.1% to 19.1% |
| Arthur D Little, 2022 | 10.0% to 30.0% |
| Gaines and coauthors, 2023 | 5.0% to 30.0% |
What the waste costs, in money and in time
The white paper prices the gap. For a modeled battery plant making 40 gigawatt hours of cells a year in Germany, it states, each percentage point of scrap rate costs about 30,000 euros a day, so a plant running at a 30% scrap rate loses about 900,000 euros a day once it reaches full production. A new battery plant also typically takes 3 to 9 months longer to start production than planned, with an average delay of 7 or more months, and each day of that delay costs the same modeled plant about 1,100,000 euros in lost profit, the white paper states.
These are the modeled numbers the white paper gives for a 40 gigawatt hour a year battery plant making NMC811 cells in Germany, with scrap sold at 70% of the price of a full cell.
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| Each percentage point of scrap rate, every day | 30,000 |
| A scrap rate of 30%, every day | 900,000 |
| One day of delay before production starts | 1,100,000 |
When scrap gets high enough to end a company
At some new battery plants, scrap runs far higher than the typical range. Bob Galyen, national distinguished expert and chairman emeritus of NAATBatt International, a battery industry association in the United States, said on a panel that most startup battery plants scrap 30% or higher of what they make, against 6% to 7% at an established plant already meeting full manufacturing standards. Independent, peer reviewed researchers give an even wider range, from under 5% to as high as 90% during the early period after a plant starts running, an industry term for that period is ramp up. Thin profit margins, often only 2% to 3% at a battery cell factory, leave little room to absorb scrap that high, the same researchers state. Nemanja Mikac, chief executive of ElevenEs, a battery company in Serbia, spoke about Northvolt, a European battery maker that later failed.
Sometimes the scrap was over 50%, which isn't sustainable.
Nemanja Mikac, chief executive, ElevenEs. Source 4.
The first year or two, it's hard to make money.
Bob Galyen, national distinguished expert and chairman emeritus, NAATBatt International. Source 5.
A different number, not to be confused with scrap
Car makers hold a qualified cell supplier to a separate, stricter number once a battery has already been accepted, less than 10 defective cells in 1,000,000. That is a quality target on finished product a car maker has already agreed to buy, not a measure of what a plant throws away while making cells in the first place.