Driven by carbon reduction goals, electrification transformation, policies and regulations, etc., the global battery market is gaining momentum and demand is exploding. In the short to medium term, the Chinese market is still the largest market in the world, but Europe and North America are following closely behind, and emerging markets represented by Southeast Asia have also become new growth poles, and the global pattern is rapidly evolving. In the Chinese market, against the backdrop of high demand for batteries, manufacturers are facing multiple opportunities and challenges.
1. The global battery market is exploding and emerging markets are rising
It is estimated that by 2030, the global lithium battery market will expand rapidly at an annual growth rate of about 25%, and the market size will reach nearly 4 TWh. China continues to lead the global market, and the European and American markets are actively following, and will be divided into three parts of the world. At the same time, new growth poles such as Southeast Asia and India are emerging.
China: Thanks to the high growth in demand for downstream scenarios such as new energy vehicles and energy storage, favorable policies, and a mature industrial chain, the market has the largest market capacity and continues to lead the world, accounting for about 40%-50% of demand. At the same time, the height of the market continues to increase, and the technological route is innovative, forward-looking, and diversified.
Europe: The goal of carbon reduction is clear and radical. Affected by the geopolitical situation, the goal of energy independence is becoming more and more clear, further promoting the transformation of electrification, and expanding the demand for batteries.
North America: The demand for batteries is growing strongly. The IRA will be introduced in 2022, which will accelerate the return of the new energy industry chain. The current market is dominated by Japanese and Korean manufacturers, and is showing a trend of decentralization.
Japan and South Korea: Japan and South Korea's local market capacity is relatively limited, accounting for only about 10% of the global scale, and they are highly dependent on exports and overseas markets. Japanese and Korean local manufacturers occupy the absolute mainstream of the market, and Chinese manufacturers can consider cooperation in technology, supply chain and other levels to leverage the connection between Korean and Japanese companies and local car companies.
Southeast Asia and India: Actively build new energy industry capabilities to drive regional industrial economic development. Two-wheeled and three-wheeled vehicles will take the lead in starting the new energy transformation, followed by electric vehicles, and the demand for batteries will explode. It is expected that the global market share will reach about 5%.
2. Strong demand in the Chinese market puts pressure on battery manufacturers
Under the dual-carbon target, the demand of China's lithium battery market continues to grow. It is estimated that by 2025, the market size will reach nearly 1TWh, and by 2030, the scale will reach about 2TWh. However, while the demand is exploding, the power battery companies in the world are facing multiple challenges.
Intensified competition and increasing concentration: The market continues to concentrate on the first and second echelon companies, which have occupied about 90% of the market share. At the same time, nearly half of the battery manufacturers have been eliminated and delisted, and the integration of the industry has accelerated.
Cost + premium, double pressure on profits: mainstream manufacturers' profits are declining. On the one hand, the prices of lithium, nickel, cobalt, copper and other metals have fluctuated and are at a high level, and battery manufacturers are under greater cost pressure. On the other hand, car companies have higher requirements for battery purchase price reductions, and the cost pressure has shifted to upstream battery manufacturers, putting pressure on the profitability of battery manufacturers.
The technology is iterated and replaced, and the layout needs to be considered urgently: relying on cost advantages and downstream demand, the market share of LFP batteries exceeds that of NCM for the first time, becoming the mainstream chemical system in China's pure electric market. It is expected that in the short term, driven by downstream market demand and cost advantages, LFP will still be the mainstream route.
In the medium and long term, as the cost of raw materials falls, battery technology matures, and demands for fast charging increase, the performance advantages of NCM in terms of energy density and fast charging will become more prominent, and the penetration rate will rebound. At the same time, it is expected that sodium-ion batteries will be mass-produced after the industrial chain layout is complete by virtue of their potential cost advantages, and will replace some LFP batteries on the A00 model.
Faced with challenges such as intensified competition in the industry, pressure on profitability, and technological iteration, battery companies urgently need to maintain an attitude of seeking change and innovation, focus on vertically integrating resources and deploying new technologies, and test the waters to explore innovative businesses to actively meet the challenges.
3. Vertical resource integration of the battery industry
In order to stabilize supply, optimize costs and control core technologies, various companies in the new energy industry chain are accelerating vertical integration, and integrated and diversified operations have gradually become a trend.
Vehicle manufacturers: The power battery accounts for about 40% of the vehicle cost, and is the key to the performance differentiation of new energy vehicles. Therefore, mainstream car companies are deploying in multiple ways such as self-research and self-production, strategic investment, joint venture factory construction, and financial investment to control technology and strengthen cost competitiveness.
Battery manufacturers: The leading lithium battery companies in the world are striving to strengthen their cost competitiveness. For example: some head manufacturers are deeply internalizing cathode materials, almost self-supplied, and can reduce costs by about 15%-20%. At the same time, through the leading battery pack/module technology and mature and stable manufacturing process, the cost advantage will be further expanded.
4. Layout battery emerging technologies
Traditional battery technology continues to iteratively optimize battery materials and battery structures, such as high-nickel and high-manganese batteries, 4680 large cylindrical batteries, and CTP/CTC technology. At the same time, the industry is actively deploying semi-solid and solid-state batteries in pursuit of increased energy density, but the bottlenecks in research and development and mass production are difficult to overcome. In addition, manufacturers are finding new ways to accelerate the deployment of fast charging technology and sodium-ion batteries, which have become new technology and capital investment directions.
Fast-charging batteries: Under the dual demands of end consumers for energy replenishment efficiency and high-voltage platforms installed by OEMs, fast-charging battery technology has developed rapidly. Due to the limitations of high cost, high-voltage platform, and mature ecology, it is estimated that by 2025, supercharging will still be a niche technology, and it will evolve into a mainstream technology by 2030. Mainstream battery manufacturers are generally optimistic about the direction of fast charging, and actively plan production capacity. By 2025, more than 30% of the industry's production capacity can be planned for the production of fast charging batteries.
Sodium-ion batteries: Considering that the abundance of sodium in the earth's crust is about 1,500 times that of lithium, it has abundant reserves and more cost advantages. After mass production, the cost of sodium-ion batteries can be about 30% lower than that of lithium iron phosphate batteries.
At the same time, in view of the low-temperature performance and safety of lithium-ion batteries, although the energy density of batteries is limited, they are more suitable for application scenarios such as energy storage, two-wheeled vehicles, backup power supplies, and micro electric vehicles. It is estimated that by 2030, the market size will reach nearly 200 GWh, with a penetration rate of about 10%. Traditional lithium battery manufacturers, sodium-ion battery start-ups, material manufacturers and cross-border companies have entered the market one after another.
China is still the largest market for lithium batteries in the world, but Europe, America and Southeast Asia are becoming new growth poles. In the environment of fierce competition in the Chinese market and pressure on manufacturers' profits, battery companies are continuing to seek opportunities for business expansion.
Battery manufacturers need to develop stronger overseas market insights, policy and regulation responses, and international business governance capabilities. When laying out new technologies, it is necessary to clarify the focus and priority of investment, study and judge the potential application market and its characteristics, so as to guide product design and market introduction rhythm.