Outsourcing Electrode Manufacturing: A Technical and Economic Evaluation

Abstract

The demand for lithium-ion batteries (LIBs) has been continuing to grow, and that is the reason why battery manufacturers like NOVO Energy face a strategic decision: whether to continue producing electrodes in-house or to outsource their production. This thesis investigated the decision by exploring both the technical and economic implications of outsourcing electrode manufacturing in the context of LIB production. The study used academic literature and expert interviews to assess four strategic scenarios: fully In-house production, fully Outsourcing, Gradual Vertical Integration, and Parallel Make-and-Buy. Each scenario was analyzed through the lens of key industry factors like cost efficiency, scalability, quality control, and intellectual property protection. Outsourcing can offer short-term benefits like lower initial investment and possibly faster ramp-up, but it also has drawbacks related to long-term control over processes and maintaining the product quality consistency. On the other hand, keeping production in-house brings tighter integration and long-term competitiveness but needs more upfront resources and causes higher early-stage risk. The thesis suggested a staged approach that combines Gradual Vertical Integration and Parallel Make-and-Buy based on the findings. By starting with external suppliers for the electrodes and then transitioning to in-house production over time, NOVO Energy can manage risks and costs while aiming towards a controlled and scalable production model