China currently owns a majority of global lithium-ion battery production, with more than 60 percent of global manufacturing capacity today, according to Wood Mackenzie.
The key driver of China’s battery manufacturing ramp-up has been the generous subsidies offered by the Chinese government solely to domestic vendors. “This has enabled China to keep ownership and control of battery industry, and the use of licensing procedures in the country has held off foreign battery vendors from taking over,” said Gupta.
But while China’s domestic battery industry is already booming, it’s really only just getting started. According to Woodmac, planned battery manufacturing capacity expansion in China — for all battery applications and chemistry types — is expected to grow by more than 2.5 times by 2026.
Battery manufacturing in Europe is also projected to accelerate in the coming years, but won’t quite reach the Asian market. By 2026, the Europe, Middle East and Africa (EMEA) region will account for almost 228 gigawatt-hours of lithium-ion cell manufacturing capacity per year, compared to the Asia-Pacific region at nearly 345 gigawatt-hours of cell manufacturing capacity per year.
Source: Wood Mackenzie
This increase is driven in large part by expected growth in the global electric vehicle market. According to Bloomberg New Energy Finance, annual demand for lithium-ion batteries from new EV sales could reach nearly 1,400 gigawatt-hours by 2030. Chinese manufacturers have their sights set on supplying the lion-share of that market need.
China’s leading EV battery producers, BYD Co. and Contemporary Amperex Technology Co. (CATL), already have plans to exponentially increase their battery production capacity over the next two years. With new gigafactories in the works, BYD and CATL are poised to surpass production levels at Tesla/Panasonic. And as product quality improves, these and other Chinese firms stand to become leading EV battery suppliers worldwide, not just domestically.
In the fifth and final installment of this GTM Squared series on China’s rapidly growing EV market, we will look at the country’s EV battery manufacturing sector, the foundation of China’s growing command of the EV market overall.