Global Battery Race: 800% Production Increase, 90% Price Drop, Meet the Leaders and Laggards

Amid a fierce price war in the battery market, this high-stakes race is a complex, decades-long balancing act involving multiple technologies and global players.

According to a BloombergNEF report, six of the ten largest battery companies are currently headquartered in China.

The race for battery supremacy is not limited to one region. Companies and governments around the world are investing heavily in battery research and development. In addition to China, the United States, Japan, and South Korea are among the leading players in the field.

However, in terms of production capacity, China’s dominance based on current technologies (lithium-ion, lithium-iron-phosphate, nickel-metal-hydride) will remain unassailable even after 2030, the report added.

US battery production capacity is forecast to increase tenfold over the next five years, starting in 2022.

Bloomberg predicts that by 2027, as global battery production increases from 1,163 GWh in 2022 to 8,945 gigawatt-hours (GWh), an increase of almost 800 percent, China will further consolidate its dominance.

By 2027, mainland China will account for 69 percent (or 6,197 GWh) of global battery production.

Despite an expected tenfold increase in U.S. battery production capacity by then, America (where battery production capacity is expected to reach 908 GWh by 2027) will account for only 10% of global production.

Germany, the former automotive giant, will receive just 6 percent, or 502 GWh. Hungary (195 GWh), Sweden (135 GWh) and Poland (112 GWh) will each account for 1-2 percent, with the rest of the world dividing up the crumbs.

China’s advantage is partly due to policies that encourage domestic ultra-competition among manufacturers. A big part of it is political pressure – which has led to its dominance in the production of cathodes, anodes and refined battery materials.

According to Benchmark Mineral Intelligence estimates, by 2030, China will retain its leading position in the battery market (thanks to CATL and BYD, whose combined market capitalization was $214 billion as of Friday, September 13, 2024), accounting for almost 70% of global production.

Energy storage is a serious game-changer, alongside AI, blockchain, DNA sequencing, and robotics. But remember, market forces can change everything, just as they did with phones and electricity.

Competition in the battery market is fierce. The U.S. government recently reported that EV battery prices have fallen by a whopping 90 percent in just 15 years.

Is the West’s indifference to this strategic industry slowly but surely weakening its position, leaving it vulnerable to the relentless growth of global competitors?

Market forces alone are no longer enough. Policy initiatives play a key role in driving a renewable lifestyle through research funding and incentives.

Why? With every new technology, new rules and standards are needed.

For electric vehicles, faster charging stations and denser charging networks would be necessary to reduce range anxiety. And just as the invention of the automobile, particularly Karl Benz’s 1886 car, marked the beginning of ICE technology overtaking horse-drawn carriages, better batteries will inevitably disrupt ICE in the future.

Sodium-ion and lithium-sulfur batteries hold promise. Their emergence could open the door to more affordable electric vehicles while reducing reliance on scarce, expensive, and unsustainable raw materials.

Many startups are banking on abundant raw materials—sodium chloride and sulfur—to drive down battery costs. But neither is likely to see mass production before 2025. Graphene, on the other hand, is in its early stages of development.

Experts like Shirley Meng, chief scientist at the U.S. Argonne National Laboratory’s Collaborative Center for Energy Storage Science, say diversifying battery materials is key to “keeping costs low and supplies secure.”

Sodium-ion batteries do not require lithium, cobalt or nickel — the three most expensive battery ingredients — but more research and testing is needed to increase their energy density.

Disadvantages: Low energy density, short cycle life, heavier than lithium-ion battery

Lithium-sulfur batteries still rely on lithium in smaller amounts, but they don’t need nickel or cobalt. Sulfur has huge potential because of its ability to store a lot of energy, but startups must overcome the fact that it’s also highly corrosive.

The performance of Western companies in the field of energy storage is mixed.

In the U.S., at least $138 billion has been invested in new battery and electric vehicle plants since the start of 2022. Nearly $10 billion of that amount has gone to companies founded by former Tesla employees, according to a report by Fastmarkets.

This demonstrates the US’s strong desire to increase battery production and the country’s overall role in the global clean energy sector.

The EU is promoting major initiatives to support innovation, sustainability and global competitiveness in batteries. One key effort is the Strategic Research and Innovation Agenda (SRIA), part of the BATT4EU Partnership, which identifies key areas for development in the battery sector.

The programme aims to create a “competitive and circular battery value chain”, ensure affordable batteries, reduce dependence on imported raw materials and promote safe and sustainable designs.

For example, in 2023, the European Commission announced a €3 billion ($3.32 billion) investment through the Innovation Fund to boost battery production, with a particular focus on cell production, to help Europe become a leader in next-generation battery technologies supporting both electric vehicles and batteries.

These funds complement existing EU projects, such as Horizon Europe, which target long-term battery research and innovation.

But isn’t this a case of too little, too late?

Could the closure of VW factories be a harbinger of further events?

Amid intense competition, Chinese manufacturers such as CATL (market cap: $115 billion) and BYD ($99.86 billion) are expanding aggressively. Their scale and experience give them an advantage while others retreat.

In Canada, amid Toronto’s 100% tariff wall on Chinese electric vehicles, Umicore postponed construction of a C$2.8 billion cathode plant. CATL, meanwhile, reported a rise in second-quarter 2024 profit.