Compared to China, where the market for electric vehicles and lithium batteries has changed the most, other countries’ development and changes are almost negligible.
That’s the conclusion of a recent report on energy storage in electric vehicles by the renowned Fraunhofer Gesellschaft zur Forderung der angewandten Forschung e. V.
Since the association is Germany’s and Europe’s largest applied science research institute, similar to the Chinese academy of sciences, its report also represents the European perspective on China’s lithium battery industry.
The report assesses the status and development level of countries in the global lithium battery market for electric vehicles through a comprehensive benchmark that covers four categories, including market demand, market structure, industry ecology and technical strength, and is broken down into 30 indicators.
According to the report, the six countries in the first tier are China, Japan, South Korea, Germany, the United States and France. Among them, China’s development far exceeds that of the other five countries.
The report concludes that China was able to successfully counter the global leadership in battery supply and grow into the largest market for electric vehicles and their lithium batteries thanks to strong policy-driven domestic demand and strategic building and expansion of the entire value chain of the electric vehicle industry. China has also shown considerable leadership in other lithium battery related markets, such as commercial vehicles, industrial energy storage applications, and static battery applications.
The following two Asian countries, Japan and South Korea, can still maintain a relatively high leading position with years of technology accumulation and market share.
In contrast to Asian countries, European countries such as Germany and France have lagged behind in battery production in recent years, and their suppliers and battery manufacturers have been slow to respond. Although many European countries are also has formulated the detailed plan or joint organization, to support the development of battery industry, such as the German government has presented in November 2018, 1 billion euros in budget investment plan of battery production, but the plan is still not enough to make Europe in the upcoming explosion of lithium battery and electric car market to maintain the current international status. For now, much of Europe’s battery chain remains in the hands of Asian battery makers and suppliers.
The report predicts that global battery demand will grow rapidly in the next few years, reaching 1-1.5TWh capacity by 2025, and that this will be the tipping point in the electric vehicle market, the transition point from a nichemarket to a red sea market.
This time frame is crucial for the global transition to the era of electric cars. Global battery demand will reach 3-6twh by 2030. Because these demands will all be generated by the manufacturers of pure electric vehicles or plug-in hybrid vehicles, the demand-side indexes in Europe such as Germany and France will be improved due to the transformation and development of their automobile industry in the coming years.
For China’s competitive advantage in the global lithium battery industry, the report makes a detailed interpretation:
Demand indicators show the sheer strength of China.
In terms of demand, from 2015 to today, China has become the leading market and corresponding largest demand market for electric vehicles and batteries. China’s policies to stimulate market demand in recent years have led to a surge in electric vehicles since 2015 (the number of electric vehicles in 2017 was 574,000, the demand for electric vehicles was 16.5 GWH, the demand for batteries was 16 GWH, and the total demand was up to 25 GWH), including electric buses, commercial vehicles, electric bicycles and other fields.
And China can continue to tap its huge domestic market. As domestic production of electric cars surges, the resulting demand for lithium batteries will allow China to further expand its lead in the foreseeable future.
In terms of market structure, China ranks first, ahead of Japan.
Because of the high demand dynamics and the huge accumulation of battery production capacity (industrial volume), new companies can establish themselves in the value chain. In particular, since 2016, many small companies have been able to carve out a place in China’s growing market for batteries and electric vehicles, compared with Japan and South Korea. One of China’s strengths in market structure remains access to its own raw materials (production) and the entire value chain. Although there are still some negative impacts on environmental assessment and governance, it will not affect China’s position in this regard.
In science and technology: China has shown a great deal of momentum in advancing technology, including a surge of high-level scientific publications and patent applications in recent years. So over the next few years, China will gradually catch up with Japan as the leader in research and development.
Of concern in the scientific and technical field is the disruptive innovation capability of the United States (i.e., achieving at least one performance parameter, such as a significantly improved energy density than existing lithium-ion batteries). However, in terms of the overall research and development environment, the United States still lags behind China and Japan, but still has a big advantage over Europe.
From the perspective of industrial environment, China further expanded its demand for electric vehicles from 2016 to 2018 due to the policy measures and incentives adopted since 2015. The result is a huge and fast-growing market for domestically produced lithium batteries. During this period, China has built a complete mass production capacity, which can reach 1.75 million kilowatt-hours per year (2017).
Although South Korea and Japan are still major battery manufacturers, China’s production capacity can cover the whole country’s demand in the future, and the supply contract between China and foreign auto companies has been established, the value chain of corresponding components in the domestic market will increase by 40% to 70% in the global market share.