China Leads the Lithium-Ion Battery Supply Chain as Europe Makes Progress: BNEF Study
BNEF based its ranking on a country’s current trajectory. However, if a nation enacts targeted policy and regulations, there is ample time to improve their position
September 23, 2020
Chinese lithium-ion battery manufacturers are likely to retain their recently acquired number one position in the next five years. The U.S. and Sweden may emerge third and fourth by 2025, respectively, according to the forecast in Bloomberg New Energy Finance’s (BNEF) ‘Global Lithium-Ion Battery Supply Chain Ranking.’
The ranking offers a snapshot of a country’s position in 2020 and indicated 2025 global rankings based on its current development trajectory.
China secured the position recently by surpassing decade-old dominant players Japan and Korea, which are now in the second and third positions. At present, the U.S. is the sixth dominant producer. Sweden is the tenth-largest player in the world market, according to the ranking list.
BNEF based its ranking on a country’s current trajectory. However, if a nation enacts targeted policy and regulations, there is ample time to improve their position.
Battery energy storage companies received $536 million in VC funding in 1H of 2020, and Lithium-ion technology has received most of the funding to date.
China faces a vast 72GWh demand for Li-ion batteries from its domestic market. It also controls almost 80% of the world’s raw material refining, 77% of the world’s cell capacity, and 60% of the world’s component manufacturing, according to data from BNEF.
Although Japan and Korea are leaders in battery and components manufacturing, they do not control much of the mining and raw material capacities.
In a statement, James Frith, BNEF’s head of energy storage, said: “China’s dominance of the industry is to be expected given its huge investments and the policies the country has implemented over the past decade.”
“The next decade will be particularly interesting as Europe and the U.S. try to create their own battery champions to challenge Asian incumbents who are already building capacity in both places. While Europe is launching initiatives to capture more of the raw material value chain, the U.S. is slower to react on this,” he said.
As the demand for electric vehicles grew, the need for relocating ancillary manufacturing near auto clusters rose. It led to a rising demand for European cell manufacturing, propelling the rest of the supply chain to make its way into Europe gradually. The growing ecosystem of battery manufacturing within the region, along with Europe’s strong environmental credentials, has helped five European countries achieve positions among the top ten countries.
“The U.S. languishes in sixth place in 2020, but the upcoming presidential election could change things. If the U.S. were to increase its investment in raw materials and promote electric vehicle adoption, it could overtake Japan and China to be number one in 2025,” said BNEF.
In contrast, the U.K. could see its position in the rankings fall in 2025 if it is unable to access the huge demand in continental Europe. The demand, estimated at 152GWh, will be around five times the size of its domestic market.
Earlier this year, the Ministry of Finance of the People’s Republic of China has issued a notice on ways to promote financial subsidies for new electric vehicles. The ministry said it had issued the order to support the new electric vehicle industry. It has highlighted a few areas of the subsidy policy for the new EVs that must be addressed. The ministry also noted that the current subsidies for fuel cell-based vehicles must also be adjusted and that the industry must strive to establish hydrogen energy and fuel vehicle industry chain in about four years.