Build or buy a battery pack? Make-or-buy decision framework for OEMs

When in-house development makes sense

In-house development of a battery pack is economically justifiable when several conditions are met simultaneously. Volume: Above a certain annual volume the development costs for housing, BMS hardware and firmware, and series-test tooling amortise. Below this threshold the internal development cost per unit exceeds the purchase price. The exact threshold varies with pack complexity but typically falls in the high hundreds to low thousands of units per year for simpler packs.

Internal cell and BMS competence: Organisations that already have experience in lithium cell handling, cell selection, pack design and BMS parameterisation — or that want to build this knowledge strategically — can build on a solid foundation. Without this base, the development phase tends to produce costly errors: incorrectly sized cell configurations, BMS parameterisation without understanding the cell characteristic, or inadequately designed protection circuits.

IP and strategic differentiation: If the battery pack itself is a differentiating feature of the end product — for example through a proprietary thermal management system, a distinctive form factor or a specific BMS interface — in-house development can protect competitive advantage. If the pack is functionally interchangeable and not core IP, this argument does not apply.

Long-term supply chain control: Controlling cell types, suppliers and bills of materials internally provides independence from changes by external manufacturers. This is particularly relevant when the end product has a very long service period and replacement packs must be available over many years.

When sourcing (Buy) is the better choice

Small to medium volumes: At annual volumes that do not allow full amortisation of development costs, sourcing is economically superior. The purchase price already includes the manufacturer's development costs — but spread across a significantly larger volume, which lowers the unit price.

Tight time-to-market window: Developing a production-ready lithium battery pack — from cell selection through BMS design and thermal management to UN 38.3 and CE — typically takes several months to a year. A sourcing partner who already has a qualified pack design and adapts it for the customer's requirements can shorten this time considerably.

Absent internal battery competence: Organisations with little or no experience with lithium cells frequently underestimate the effort: cell characterisation, balancing design, thermal model, protection concept, communication protocol, manufacturing and test concept. These are disciplines that a specialised manufacturer masters in daily business.

Certification effort: UN 38.3 (transport testing), IEC 62619 (safety for motive lithium batteries) and CE (LVD, EMC, possibly Machinery Directive) require accredited test laboratories, structured documentation and re-testing when the pack design changes. A certified sourcing manufacturer delivers these proofs as part of the supply scope.

Decision criteria compared

The following comparison covers the key criteria in the make-vs.-buy assessment. No single criterion is decisive — only the overall picture yields the well-founded decision.

Volume: Make — worthwhile at high annual volumes that amortise development costs. Buy — economically superior at small to medium volumes; the manufacturer's development costs are spread across larger volumes.

Internal BMS and cell competence: Make — requires solid in-house know-how (cell characterisation, balancing, thermal model, protection concept). Buy — no internal battery knowledge required; the manufacturer carries the technical responsibility.

Time-to-market: Make — longer lead time for development, prototype phase, testing and series ramp-up. Buy — shorter lead time, especially with manufacturers offering proven pack platforms.

IP and know-how protection: Make — all design know-how stays in-house; maximum IP protection. Buy — design know-how resides with the manufacturer; NDA and contractual arrangements protect customer-specific requirements.

Certification effort (UN 38.3, IEC 62619, CE): Make — full certification effort falls on the OEM; binds development capacity and laboratory costs. Buy — the manufacturer supplies certification proofs; the OEM only verifies completeness.

TCO (Total Cost of Ownership): Make — lower unit manufacturing cost at high volumes, but high fixed costs in development, tooling and quality assurance. Buy — calculable unit price, no development fixed-cost block; TCO advantage at small to medium volumes.

Supply chain and resilience: Make — own control over cell suppliers and bills of materials; dependence on cell suppliers remains. Buy — dependence on the manufacturer; good partners offer cell alternatives and supply continuity over the product lifetime.

The hybrid path: buy the pack, integrate it yourself

Many OEMs choose a middle path: they source the battery pack itself — cells, BMS, housing, certification — from a specialised manufacturer. The mechanical integration into their device, the electrical connection to their controller and the system integration in the end product remain their own responsibility.

This hybrid approach combines the advantages of both sides: the manufacturer contributes cell know-how, BMS parameterisation, thermal design and certification proofs. The OEM retains control over the overall system, the communication interfaces and the integration into their machine controller.

The key to success lies in interface definition: what information does the BMS supply over CAN bus or Profinet to the controller? Which protection mechanisms reside in the pack, which in the higher-level controller? These questions must be fixed jointly in the project specification — they cannot be adjusted retrospectively without triggering pack modification and potentially new certification steps.

Hellpower Energy covers exactly this hybrid path: custom battery packs with a defined communication interface, delivered with all certification proofs, designed to the OEM's mechanical and electrical requirements.

Checklist for the make-or-buy decision

The following checklist structures the evaluation. Those who answer the Make questions with No in the majority should seriously consider sourcing or the hybrid path.