Eastern regions still dominate battery metals market
Asia Pacific leads the world in battery manufacturing, holding about 87% of all key components, and the region is making determined strides in the global market. China’s lithium ion battery export revenue is particularly strong – up 80% year-on-year in the first quarter of 2023 – and the country will continue to control the supply chain for the next decade, maintaining more than 80% of LFP cathodes, electrolytes and separators to 2032 and beyond.
We are beginning to see changes, however. Localisation policies in the US are starting to make a dent on Asia’s dominance in some areas, and will cause China and South Korea’s share of Ni-based cathode production capacity to fall to 53% and 14% by 2032, respectively.
The US and Europe encroach
North America is accelerating local capacity under the Inflation Reduction Act, catching up with China as it curbs local investment. The US announced a capacity of over 350 GWh in the first half of 2023, almost equal to the whole of last year’s capacity. Remarkably, over 50% of the investment are from joint ventures in which Chinese and South Korean manufacturers participate. It’s clear that North America and Europe will pose a credible challenge to Asia Pacific in the coming years, as they boost their combined share of global battery production capacity to over 30% by 2032.
ESS and lithium lead the charge
Production of Stationary Energy Storage System (ESS) – batteries often used for renewable energy – is also set to increase. Capacity will exceed 700 GWh by 2032, sufficient to meet all ESS demand, and once again China will overwhelmingly take the market share, accounting for 89% of capacity. Solar manufacturers in China are actively developing storage businesses and investing in battery production and system integration. Chinese manufacturers have launched 300 Ah-320 Ah prismatic battery cells for grid-scale storage and having signed a long-term agreement of over 100 GWh in H1, especially with overseas clients, their dominance in this market looks secure for some time.
The market share of lithium iron phosphate (LFP) batteries which are preferred in China ESS market is supercharged, reaching 28% in 2023, and expected to surpass nickel-based batteries in 2030. Production of non-lithium-ion batteries is also scaling up, yet they will not exceed 3% of the market by 2032.
