From my experience, it comes from costs generated by:
1. Additional R&D-work and QA for the modification
2. New supply-chain deals for lower-volume components
Current sales-volume of Europe is only a quarter of the global volume, so price-negotiation is based on a much lower total volume-forecast.
Even if not, Battery prices today are ~15% higher than in 2024 (I expect Nintendo signed the supply-deal in late 2024), it'll be hard for Nintendo to cancel their existing supply-contract before fulfilling it (!), move to a different component AND get the same/lower price.
--> Better to sell other regions as-is, fulfill the contract and hope for a better climate in a year.
3. Tooling/Assembly (Ramp-Up costs, different processes, QA,...)
4. Re-certification of HW for relevant bodies in that region (Europe is quite lean on this, CE-certification is simple compared to US FTC/FCC)
I can almost hear the conversation with Nintendo of America CEO about covering 1/3 of the cost to get the same SKU and him simply responding "No, we just raised the prices because of component-cost increase, we wait for the HW-refresh in 2H/2027"
I wouldn't be surprised if they plan to unify the SKU again with a premium "Switch 2 OLED", offsetting the additional costs, preserving the margin and having an additional selling-point...