As the world's largest battery maker, China must remain vigilant about the industry climate.
Although the Battery EV (BEV) market is slowing, the booming Plug-in Hybrid EV (PHEV) sales are poised to bolster battery companies amid the downturn. In addition, the country has bet on the all-solid-state battery to accelerate technology innovation.
According to South Korea-based SNE Research, the world used over 705GWh of EV batteries in 2023, up 38.6% from the previous year. Chinese EV makers continued to occupy six spots of the top-10 ranking by installation. CATL, the world's largest battery company, maintained a stable market share of more than 36%, while BYD's share increased from 13.9% to 15.8% last year as it expanded worldwide.
World's top 10 EV battery makers, 2023 | |||||
Rank | Company | Usage (GWh) | YoY change (%) | 2022 market share (%) | 2023 market share (%) |
1 | CATL | 259.7 | 40.8 | 36.2 | 36.6 |
2 | BYD | 111.4 | 57.9 | 13.9 | 15.8 |
3 | LGES | 95.8 | 33.8 | 14.1 | 13.6 |
4 | Panasonic | 44.9 | 26 | 7 | 6.4 |
5 | SK On | 34.4 | 14.4 | 5.9 | 4.9 |
6 | CALB | 33.4 | 80.9 | 3.6 | 4.7 |
7 | Samsung SDI | 32.6 | 36.1 | 4.7 | 4.6 |
8 | Gotion | 17.1 | 23.1 | 2.7 | 2.4 |
9 | Eve Energy | 16.2 | 129.8 | 1.4 | 2.3 |
10 | Sunwoda | 10.5 | 15.4 | 1.8 | 1.5 |
Source: SNE Research, compiled by DIGITIMES Asia, March 2024
Data from the China Automotive Power Battery Industry Innovation Alliance showed that the country exported 16.3GWh of EV batteries in the first two months of 2024, slightly decreasing by 1.9% year-on-year. CATL, BYD, and Farasis Energy were the top three exporters.
Rising PHEV sales to encourage more advanced batteries
The global battery sector's growth decelerated in 2023. Anya Sidhu, an analyst with London-based Benchmark Mineral Intelligence, said in a battery webinar that only 47 new battery gigafactories were announced worldwide last year, compared to 102 in 2022 and 80 in 2021.
Sidhu also said China's battery production growth rate was 15% in 2023 and 62% in 2022. The slower increase resulted from concerns about overcapacity and competition from more established players.
PHEVs could be the new driver the battery industry has been looking for. In February, BYD launched a new version of its Qin Plus, a PHEV, in China with a starting price of CNY79,800 (US$11,172.6), lower than many of its gasoline competitors.
Automakers like Wuling and Changan Automobile followed suit and cut the prices of their PHEVs. The price war between PHEVs and gasoline cars will likely persist throughout the year.
According to the China Association of Automobile Manufacturers (CAAM), PHEV sales achieved 467,000 units for the first two months of 2024, up 72.8% from last year. BEVs only saw an 11.7% growth year-over-year while reaching a higher sales volume of 740,000 cars.
Higher PHEV sales will boost battery installation. Vehicle price competition will also force the battery supply chain to reduce costs further and accelerate technology iteration. China-based Sohu reported that as PHEVs' driving range extends from between 50km and 70km to over 100km, leading battery makers have concentrated on improving the power of battery packs.
For instance, BYD developed high-power blade batteries specifically for its PHEVs. More PHEV batteries with enhanced charge capacity and better charging efficiency are expected to hit the market in 2024.
Government-industry joint efforts to form an all-solid-state battery supply chain
At a ceremony in January to establish the China All-Solid-State Battery Collaborative Innovation Platform (CASIP), Ouyang Minggao, a Tsinghua University professor and a member of the Chinese Academy of Sciences, said China is facing EV battery overproduction and fierce domestic competition after 10 years of scale-up.
According to Ouyang, the energy density of EV batteries has increased threefold in the past 10 years, with production costs decreasing by more than 80%. However, lithium battery prices slumped by 50% in 2023 and only a few battery companies earned profits.
S&P Global's data showed lithium prices declined over 60% in 2023. Prices of critical cathode and anode materials, including nickel, graphite, and cobalt, dropped by 30%. Low material costs throughout 2024 will save EV makers some expenditure on batteries, but the situation will hurt the battery supply chain's margin.
Ouyang said China's battery industry must enhance its technology and efficiency, passing the downturn with innovation.
This is why the Chinese government, academia, battery companies, and EV makers collaborated on the all-solid-state battery platform. The battery, which endures a broader range of temperatures and offers higher energy density, is considered a leading solution for next-generation batteries. Large-scale commercialization of the technology is expected to arrive between 2027 and 2030.
Industry members of China's all-solid-state battery consortium include CATL, BYD, Gotion High-tech, and Nio. The group aims to set up a supply chain for the battery by 2030. It will also conduct basic research and develop EVs powered by the technology.
Whether China's all-solid-state battery ambition will catch up with Japan is worth the attention. Three major Japanese automakers, Toyota, Hodan, and Nissan, have all been developing next-generation batteries. According to Nikkei Asia, Toyota plans to launch an all-solid-state battery EV between 2027 and 2028, while Nissan will roll out its vehicle in fiscal year 2028.
One thing is certain: It will take some time before all-solid-state batteries dominate the market. According to the China Power News Network, the battery might need 20 to 30 years to occupy 50% of the market share of its liquid-electrolyte counterparts.
