Outlook 2021
China's long lead in battery production CHARTED
China will dominate battery production, according to a trend study published by Benchmark Minerals.
Looking at current build outs, Benchmark forecasts that by 2029 just under 67% of batteries will be manufactured in China. The monthly trend data comes from December's update. (Use your mouse to roll over the segments in the chart above for amounts.)
Regarding the chart, lithium ion predominantly refers to rechargeable batteries with cathode chemistries, such as NCM and NCA, lithium-nickel-manganese-cobalt-oxide, and lithium-iron-phosphate, respectively.
A megafactory is a lithium-ion battery cell production facility with a capacity of greater than one GWh per year, which is equal to 1,000 MWh/Megawatt hours, a standard battery measure.
Benchmark uses three categories for manufacturing types:
Tier 1: Qualified to supply multi-national electric vehicle (EV) producers outside of China
Tier 2: Qualified to supply Chinese EV market/non EV applications
Tier 3: Unqualified – limited or no track record of cell production
ELECTRIC VEHICLE SALES
Electric vehicles, renewables, and a general switch to electrification are driving the demand for lithium ion batteries.
In its recent update, Benchmark said lithium ion battery production capacity increased to 3,009.7 GWh by 2029, an increase of 1.3% on the month prior, with 181 plants now tracked.
Electric vehicle production will eventually eclipse internal combustion engines. While the segment is growing strongly, analyst Matt Watson sees growth constraints coming from material costs
"Some forecasts have BEV sales climbing to 20M, 40M, or even 60M/year by 2040 or 2050. Jumping ahead in my analysis, the world will struggle to make 15M BEV's, with lithium battery materials constraints. Nickel, lithium, cobalt, vanadium, and graphite are all shown to be in significant structural deficits by 2023/27 trying to make 3M to 5M BEV's a year," said Watson.
CURRENT STATE OF EV SALES
In its Insight publication, McKinsey notes that EV sales vary depending upon the region. Sales have flattened in the U.S. and China. However, European sales are strong.
"In the United States, EV sales dropped by 12 percent in 2019, with only 320,000 units sold. Meanwhile, sales in Europe rose by 44 percent, to reach 590,000 units. These trends continued in first-quarter 2020 as EV sales decreased from the previous quarter by 57 percent in China and by 33 percent in the United States. In contrast, Europe's EV market increased by 25 percent," writes McKinsey.
Europe sales have been propped up by generous state subsidies, partly driven by worries that the automotive industry is losing ground to innovators in China and the U.S.
Last spring, Europe launched a series of aggressive moves to fend off the COVID-19 downturn and also spur renewables. France’s electric vehicle subsidy is being hiked from €6,000 ($A9,910) to €7,000 ($A11,560) for private vehicle owners from June 1 to December 31, 2020, according to a report by The Driven. Germany is adding €3,000 subsidy for electric cars costing less than €40,000 – resulting in a total subsidy of €6,000 from the government and total discount of €9,000 (~$10,000 USD), according to a report by Electrek.
Image of charging stations courtesy of Adventures of Pam & Frank
